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What changed in DiamondRock Hospitality Co's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of DiamondRock Hospitality Co's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+290 added−317 removedSource: 10-K (2025-02-28) vs 10-K (2024-02-28)

Top changes in DiamondRock Hospitality Co's 2024 10-K

290 paragraphs added · 317 removed · 242 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

42 edited+8 added−24 removed35 unchanged
Biggest changeOur capital recycling program has also achieved several other important strategic portfolio goals that include improving our portfolio’s geographic, climate, operator and brand diversity. In addition, we have repositioned certain of our hotels through a change in brand, comprehensive renovation and/or change in third-party hotel manager to a more efficient operator, which further improved our portfolio's brand and management diversity.
Biggest changeIn addition, we have repositioned certain of our hotels through a change in brand, comprehensive renovation and/or change in third-party hotel manager to a more efficient operator, which further improved our portfolio's brand and management diversity. We are highly sensitive to our cost of capital and may pursue acquisitions that create value in the near term.
If our cost of capital is attractive, we expect to: • pursue strategic acquisitions in line with our target asset type; • consider opportunistically raising equity; and -6- Table of Contents • evaluate opportunities to dispose of non-core hotels.
If our cost of capital is attractive, we expect to: -6- Table of Contents • pursue strategic acquisitions in line with our target asset type; • consider opportunistically raising equity; and • evaluate opportunities to dispose of non-core hotels.
This competition may reduce the number of suitable investment opportunities offered to us and increase the cost of acquiring our targeted hotel investments. Seasonality -10- Table of Contents The periods during which our hotels experience higher revenues vary from property to property, depending principally upon location and the customer base served. Accordingly, we expect some seasonality in our business.
This competition may reduce the number of suitable investment opportunities offered to us and increase the cost of acquiring our targeted hotel investments. -10- Table of Contents Seasonality The periods during which our hotels experience higher revenues vary from property to property, depending principally upon location and the customer base served. Accordingly, we expect some seasonality in our business.
Our Company We commenced operations in July 2004 and became a public reporting company in May 2005. Our common stock and Series A Preferred Stock are traded on the New York Stock Exchange (the “NYSE”) under the symbols “DRH” and “DRH Pr A”, respectively.
Our Company We commenced operations in July 2004 and became a public reporting company in May 2005. Our common stock and Series A Preferred Stock are listed and traded on the New York Stock Exchange (the “NYSE”) under the symbols “DRH” and “DRH Pr A”, respectively.
Our Corporate Structure We conduct our business through a traditional umbrella partnership REIT, or UPREIT, in which our hotels are owned by subsidiaries of our operating partnership, DiamondRock Hospitality Limited Partnership. We are the sole general partner of our operating partnership and own either directly or indirectly 99.7% of the limited partnership units (“common OP units”) of our operating partnership.
Our Corporate Structure We conduct our business through a traditional umbrella partnership REIT, or UPREIT, in which our hotels are owned by subsidiaries of our operating partnership, DiamondRock Hospitality Limited Partnership. We are the sole general partner of our operating partnership and own either directly or indirectly 99.5% of the limited partnership units (“common OP units”) of our operating partnership.
In order for the income from our hotel investments to constitute “rents from real property” for purposes of the gross income tests required for REIT qualification, we must lease each of our hotels to a wholly-owned subsidiary of our taxable REIT subsidiary, or TRS (each, a TRS lessee), or to an unrelated third party.
In order for the income from our hotel investments to constitute “rents from real property” for purposes of the gross income tests required for REIT qualification, we must lease each of our hotels to our taxable REIT subsidiaries, or TRS, or a wholly-owned subsidiary thereof (each, a TRS lessee), or to an unrelated third party.
As of December 31, 2023, our outstanding debt consists of a combination of unsecured term loans and fixed-rate property-specific mortgage debt. We prefer that a significant portion of our portfolio remain unencumbered by debt in order to provide maximum balance sheet flexibility.
As of December 31, 2024, our outstanding debt consists of a combination of unsecured term loans and fixed-rate property-specific mortgage debt. We prefer that a significant portion of our portfolio remain unencumbered by debt in order to provide maximum balance sheet flexibility.
We make our proxy statements, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, including exhibits, and amendments to those reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), -11- Table of Contents available on our website free of charge as soon as reasonably practicable after such reports and amendments are electronically filed with, or furnished to, the Securities and Exchange Commission (the “SEC”).
We make our proxy statements, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, including exhibits, and amendments to those reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), available on our website free of charge as soon as reasonably practicable after such reports and amendments are electronically filed with, or furnished to, the Securities and Exchange Commission (the “SEC”).
We post to the Investor Relations section of our website important information about our business, our operating results and our financial condition and prospects, including, for example, information about material acquisitions and dispositions, our earnings releases and certain supplemental financial information related or complimentary thereto.
We post to the Investor Relations section of our website important information about our business, our operating results and our financial condition and prospects, including, for example, information about material acquisitions and dispositions, our earnings releases and certain supplemental financial information related or complementary thereto.
In turn, our TRS lessees must engage a third-party management company to manage the hotels. As of December 31, 2023, we leased all of our hotels to TRS lessees, except for one hotel that is directly owned by a TRS.
In turn, our TRS lessees must engage a third-party management company to manage the hotels. As of December 31, 2024, we leased all of our hotels to TRS lessees, except for one hotel that is directly owned by a TRS.
The following charts display our Total Energy Consumption and Total Water Consumption for 2020, 2021 and 2022, the last fiscal year for which data is available. These metrics relate to our hotels owned for the entire year presented.
The following charts display our Total Energy Consumption and Total Water Consumption for 2021, 2022 and 2023, the last fiscal year for which data is available. These metrics relate to our hotels owned for the entire year presented.
We believe prioritizing employee well-being is a key element for attracting and retaining the best and most talented associates. Our key human capital management objectives are to attract, recruit, hire, develop and promote a deep and diverse bench of talent that translates into a strong and successful workforce.
We believe prioritizing employee well-being is a key element for attracting and retaining the best and most talented employees. Our key human capital management objectives are to attract, recruit, hire, develop and promote a deep bench of talent that translates into a strong and successful workforce.
Insurance We carry comprehensive liability, fire, extended coverage, windstorm, business interruption and rental loss insurance covering all of the properties in our portfolio. In addition, we carry earthquake and terrorism insurance on our properties in an amount and with deductibles which we believe are commercially reasonable.
Insurance We carry comprehensive property insurance and general liability insurance, including fire, extended coverage, windstorm, business interruption and rental loss insurance covering all of the properties in our portfolio. In addition, we carry earthquake and terrorism insurance on our properties in an amount and with deductibles which we believe are commercially reasonable.
In 2020 and 2021, total consumption of both energy and water was significantly reduced due to the historically low occupancy levels at our hotels as a result of the COVID-19 pandemic. -8- Table of Contents We display key metrics, documents, programs and policies through the Global Reporting Initiative (“GRI”) Index, and in accordance with the GRI framework.
In 2021, total consumption of both energy and water was significantly reduced due to the historically low occupancy levels at our hotels as a result of the COVID-19 pandemic. We display key metrics, documents, programs and policies through the Global Reporting Initiative (“GRI”) Index, and in accordance with the GRI framework.
We also display disclosures in accordance with the framework established by the Task Force on Climate-Related Financial Disclosures. Annually, we submit a response to the GRESB survey (the “GRESB Report”), which benchmarks our approach and performance on ESG indicators against other real estate companies. The GRESB Report is accessible on our website.
We also display disclosures in accordance with the framework established by the Task Force on Climate-Related Financial Disclosures. Annually, we submit a response to the GRESB survey (the “GRESB Report”), which benchmarks our approach and performance on environmental, social and governance indicators against other real estate companies. The GRESB Report is accessible on our website.
We regularly evaluate our portfolio to determine if there are additional opportunities to employ these value-add strategies. Our asset management team is focused on improving hotel profit margins through revenue management strategies and cost control programs.
We regularly evaluate our portfolio to determine if there are additional opportunities to employ these value-add strategies. Our asset management team is focused on improving hotel profits through revenue management strategies and cost control programs.
High-Quality Urban and Destination Resort Hotels As of December 31, 2023, we owned 36 premium hotels and resorts throughout the United States. Our hotels and resorts are primarily categorized as luxury and upper upscale as defined by STR, Inc. and are generally located in high barrier-to-entry markets with multiple demand generators.
High-Quality Urban and Destination Resort Hotels As of December 31, 2024, we owned 37 premium hotels and resorts throughout the United States. Our hotels and resorts are primarily categorized as luxury and upper upscale as defined by STR, Inc. and are generally located in high barrier-to-entry markets with multiple demand generators.
The remaining 0.3% of the common OP units are held by third parties and executive officers of the Company. A portion of our common OP units were issued in connection with our acquisition of Cavallo Point, The Lodge at the Golden Gate (“Cavallo Point”) in December 2018.
The remaining 0.5% of the common OP units are held by third parties and current and former executive officers of the Company. A portion of our common OP units were issued in connection with our acquisition of Cavallo Point, The Lodge at the Golden Gate (“Cavallo Point”) in December 2018.
The water and energy data we use is first gathered from utility statements and then reviewed, aggregated, and analyzed by third-parties. Beginning in 2021, we engaged an independent third party to verify our energy and water consumption data.
The water and energy data we use is first gathered from utility statements and then reviewed, aggregated, and analyzed by third-parties. -8- Table of Contents Beginning in 2021, we engaged an independent third party to verify our energy and water consumption data.
We believe that premier global hotel brands create significant value for certain hotels as a result of each brand's ability to produce incremental revenue through their strong reservation and loyalty rewards systems and sales organizations.
We also maintain a portion of our hotels as independent lifestyle hotels. We believe that premier global hotel brands create significant value for certain hotels as a result of each brand's ability to produce incremental revenue through their strong reservation and loyalty rewards systems and sales organizations.
We cooperatively partner with our hotel managers in an attempt to increase -7- Table of Contents operating results and long-term asset values at our hotels.
We cooperatively partner with our hotel managers in an attempt to increase operating results and long-term asset values at our hotels.
We expect that our strategy will enable us to maintain a balance sheet with an appropriate amount of debt throughout all phases of the lodging cycle. Corporate Responsibility Created in 2014, our Corporate Responsibility program incorporates governance, environmental, and social initiatives in our overall business strategy, investment decisions and asset management strategies.
We expect that our strategy will enable us to maintain a balance sheet with an appropriate amount of debt throughout all phases of the lodging cycle. Corporate Responsibility Our Corporate Responsibility program incorporates governance, environmental, and social initiatives in our overall business strategy, investment decisions and asset management strategies. Our Corporate Responsibility program is guided by executive and board-level oversight.
Innovative Asset Management We believe that we can create significant value in our portfolio through innovative asset management strategies such as rebranding, renovating and repositioning our hotels. We completed rebrandings at five of our hotels since 2021 and are currently completing rebrandings and repositionings at three additional hotels.
Innovative Asset Management We believe that we can create significant value in our portfolio through innovative asset management strategies such as rebranding, renovating and repositioning our hotels. We completed rebrandings at six of our hotels since 2021 and are currently completing a rebranding and repositioning at one additional hotel.
Item 1. Business Overview DiamondRock Hospitality Company is a lodging-focused Maryland corporation operating as a REIT for U.S. federal income tax purposes. As of December 31, 2023, we owned a portfolio of 36 premium hotels and resorts that contain 9,746 guest rooms located in 25 different markets in the United States.
Item 1. Business Overview DiamondRock Hospitality Company is a lodging-focused Maryland corporation operating as a REIT for U.S. federal income tax purposes. As of December 31, 2024, we owned a portfolio of 37 premium hotels and resorts that contain 10,004 guest rooms located in 26 different markets in the United States.
The information included in, referenced to, or otherwise accessible through the GRESB Report, is not incorporated by reference in, or considered to be a part of, this report or any document unless expressly incorporated by reference therein.
The information included in or otherwise accessible through the GRESB Report, is not incorporated by reference in, or considered to be a part of, this Annual Report on Form 10-K or any other document unless expressly incorporated by reference therein.
As of December 31, 2023, limited partners held 723,166 common OP units. In the future, we may issue additional common OP units from time to time in connection with acquiring hotel properties, financing, compensation, or other reasons.
As of December 31, 2024, limited partners held 994,653 common OP units. We may issue additional common OP units from time to time in connection with acquiring hotel properties, financing, compensation, or other reasons.
We currently employ a conservative debt profile with prudent leverage. We maintain balance sheet flexibility with our existing corporate cash, limited near-term debt maturities , capacity under our senior unsecured credit facility and 32 of our 36 hotels unencumbered by mortgage debt as of December 31, 2023.
We currently employ a conservative debt profile with prudent leverage. We maintain balance sheet flexibility with our existing corporate cash, capacity under our senior unsecured credit facility and 34 of our 37 hotels unencumbered by mortgage debt as of December 31, 2024.
We evaluate each hotel in our portfolio to assess the optimal brand and management strategy for the individual hotel and market. We leverage the leading global hotel brands at many of our hotels, which are flagged under a brand owned by Marriott, Hilton or IHG. We also maintain a portion of our hotels as independent lifestyle hotels.
We evaluate each hotel in our portfolio to assess the optimal brand and management strategy for the individual hotel and market. We leverage the leading global hotel brands at many of our hotels, which are flagged under a brand owned by Marriott International, Inc. (“Marriott”), Hilton Worldwide Holdings Inc. (“Hilton”) or IHG Hotels & Resorts (“IHG”).
We have enhanced our hotel portfolio over the past several years by recycling capital from non-core hotels, located in slower growth markets, to higher quality hotels located primarily in urban and destination resort markets that align with our strategic goals. Over 97% of revenues for the year ended December 31, 2023 was derived from core urban and resort destination hotels.
We have enhanced our hotel portfolio over the past several years by recycling capital from non-core hotels, located in slower growth markets or requiring a significant capital investment, to higher quality hotels located primarily in urban and destination resort markets that align with our strategic goals.
Certain of the properties in our portfolio are located in areas known to be seismically active or subject to hurricanes and we believe that we have appropriate insurance for those risks, although they are subject to higher deductibles than ordinary property insurance.
We do not carry insurance for generally uninsurable losses such as loss from riots, war or acts of God. Certain of our properties are located in areas known to be seismically active or subject to hurricanes and we believe that we have appropriate insurance for those risks, although they are subject to higher deductibles than ordinary property insurance.
Our asset management team also focuses on identifying new and potential value creation opportunities across our portfolio, including implementing resort or amenity fees, creating incremental guest rooms, leasing out restaurants to more profitable third-party operators, converting underutilized space to revenue-generating meeting space, marketing underutilized midweek bookings and implementing programs to reduce energy consumption and increase labor efficiency.
Our asset management team also focuses on identifying new and potential value creation opportunities across our portfolio, including implementing resort or amenity fees where appropriate, creating incremental guest rooms, leasing out restaurants to more profitable third-party operators, converting underutilized space to revenue-generating meeting space, marketing underutilized midweek bookings and implementing programs to reduce energy consumption and increase labor efficiency. -7- Table of Contents Our senior management team has established a broad network of hotel industry contacts and relationships, including relationships with hotel owners, financiers, operators, project managers and contractors and other key industry participants.
To support these objectives, our human resources programs are designed to develop talent to prepare them for the critical roles and leadership positions for the future; reward and support employees through competitive pay and benefit programs; enhance our culture through efforts to foster, promote, and preserve a culture of diversity and inclusion; and evolve and invest in technology, tools, and resources to enable employees at work.
To support these objectives, our human resources programs are designed to develop talent to prepare them for the critical roles and leadership positions of the future; reward and support employees through competitive pay and benefit programs; enhance our culture that is focused on providing a work environment that is free from any form of discrimination of harassment for any protected class; and evolve and invest in technology, tools, and resources to enable employees at work.
We are highly sensitive to our cost of capital and may pursue acquisitions that create value in the near term. We will continue to evaluate our portfolio for opportunities to upgrade our portfolio by considering strategic acquisitions and opportunistic non-core hotel dispositions. Our acquisition strategy focuses primarily on hotels that we believe present unique value-add opportunities.
We will continue to evaluate our portfolio for opportunities to upgrade our portfolio by considering strategic acquisitions and opportunistic non-core hotel dispositions. Our acquisition strategy focuses primarily on hotels that we believe can be acquired at a discount to replacement cost present unique value-add opportunities.
The markets that we target are those that we believe align with our strategic objectives, which include investing in assets in destination markets with constrained supply trends, those that provide geographic diversity relative to our existing portfolio, and those markets that are considered to have high growth potential.
Subsequent to December 31, 2024, we sold the Westin Washington D.C. City Center hotel located in Washington, D.C. The markets that we target are those that we believe align with our strategic objectives, including destination markets with constrained supply trends, those that provide geographic diversity relative to our existing portfolio, and those that are considered to have high growth potential.
The guest loyalty programs operated by these global brands generate repeat guest business that might otherwise go to competing hotels.
The guest loyalty programs operated by these global brands can be a cost-effective source of guest demand that might otherwise go to competing hotels.
The information included in, referenced to, or otherwise accessible through our website, is not incorporated by reference in, or considered to be a part of, this report or any document unless expressly incorporated by reference therein. DiamondRock Hospitality Company is traded on the NYSE under the symbols “DRH” and “DRH Pr A.” Supplemental Material U.S.
The information included in or otherwise accessible through our website, is not incorporated by reference in, or considered to be a part of, this Annual Report on Form 10-K or any other document unless expressly incorporated by reference therein. Supplemental Material U.S. Federal Income Tax Considerations The following discussion supplements and updates the disclosure under “Material U.S.
Employees and Human Capital As of December 31, 2023, we employed 33 full-time employees. None of our employees is a member of any union. During 2023, all employees involved in the day-to-day operation of our hotels were employed by third-party management companies engaged pursuant to hotel management agreements.
During 2024, all employees involved in the day-to-day operation of our hotels were employed by third-party management companies engaged pursuant to hotel management agreements.
For more information on our Corporate Responsibility program, as well as our enterprise-wide policies, please see our current Corporate Responsibility Report available at https://investor.drhc.com/sustainability-report. The information included in, referenced to, or otherwise accessible through our website, is not incorporated by reference in, or considered to be part of, this report or any document unless expressly incorporated by reference therein.
The information included in or otherwise accessible through our website, is not incorporated by reference in, or considered to be part of, this Annual Report on Form 10-K or any other document unless expressly incorporated by reference therein.
In 2023, as a result of our commitment to sustainability, we were ranked first in sustainability performance as the America’s Regional Listed Sector Leader for Hotels for the fifth consecutive year by the GRESB Real Estate Assessment for the Standing Investments Benchmark. We are committed to transparent reporting of our environmental, social, and governance (“ESG”) initiati ves.
The Nominating and Corporate Governance Committee is assigned to oversee the policies, strategy, and implementation of the program. In 2024, as a result of our commitment to sustainability, we were ranked first in sustainability performance as the Global Listed Sector Leader/Hotel by the GRESB Real Estate Assessment for the Standing Investments Benchmark.
Our senior management team has established a broad network of hotel industry contacts and relationships, including relationships with hotel owners, financiers, operators, project managers and contractors and other key industry participants. We use our broad network of hotel industry contacts and relationships to maximize the value of our hotels.
We use our broad network of hotel industry contacts and relationships to maximize the value of our hotels.
In addition, either we or the hotel manager are responsible for obtaining general liability insurance, workers' compensation and employer's liability insurance. Available Information We maintain a website at the following address: www.drhc.com.
In addition, either we or the hotel manager are responsible for obtaining general liability insurance, workers' compensation and employer's liability insurance. We may adjust our insurance coverage based on market conditions or changes in a property's risks or exposures.
Federal Income Tax Considerations The following discussion supplements and updates the disclosure under “Material U.S. Federal Income Tax Considerations” in the prospectus dated August 6, 2021 contained in our Registration Statement on Form S-3 filed with the SEC on August 6, 2021 (such disclosure, the “Base Disclosure”).
Federal Income Tax Considerations” in the prospectus dated August 5, 2024 contained in our Registration Statement on Form S-3 filed with the SEC on August 5, 2024 (such disclosure, the “Base Disclosure”). Capitalized terms used in this section that are not otherwise defined shall have the same meaning as when used in the Base Disclosure.
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Our Corporate Responsibility program is guided by executive and board-level oversight, with the board’s Nominating and Corporate Governance Committee assigned to oversee the policies, strategy, and implementation of the program.
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Over 97% of revenues for the year ended December 31, 2024 was derived from core urban and resort destination hotels. Our capital recycling program has also achieved several other important strategic portfolio goals that include improving our portfolio’s geographic, climate, operator and brand diversity.
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In January 2024, we published our most recent annual Corporate Responsibility Report, which includes ESG policies, environmental and social programs, historic results and performance targets.
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In addition, in 2024, we were the recipient of the National Association of Real Estate Investment Trusts’ (“Nareit”) 2024 Leader in the Light Award for the lodging and resorts sector. The award recognizes member companies that demonstrate leadership in implementing sustainable and socially responsible investment and operating practices, good governance, and transparency.
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We do not carry insurance for generally uninsured losses such as loss from riots, war or acts of God.
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We are committed to transparent reporting of our corporate responsibility initiati ves. In January 2025, we published our most recent annual Corporate Responsibility Report.
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Capitalized terms used in this section that are not otherwise defined shall have the same meaning as when used in the Base Disclosure. On December 29, 2022, the IRS promulgated final Treasury Regulations under Sections 897, 1441, 1445, and 1446 of the Code that were, in part, intended to coordinate various withholding regimes for non-U.S. stockholders.
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For more information on our Corporate Responsibility program, as well as our enterprise-wide policies, please see our current Corporate Responsibility Report available at https://investor.drhc.com/sustainability-report.
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The withholding rules applicable to ordinary REIT dividends paid to a non-U.S. stockholder (generally, a 30% rate of withholding on gross amounts unless otherwise reduced by treaty or effectively connected with such non-U.S. stockholder’s trade or business within the United States and proper certifications are provided) apply to (a) that portion of any distribution paid by us that is not designated as a capital gain dividend, a return of basis or a distribution in excess of the non-U.S. stockholder’s adjusted basis in its stock that is treated as gain from the disposition of such stock and (b) any portion of a capital gain dividend paid by us that is not treated as gain attributable to the sale or exchange of a United States real property interest by reason of the recipient not owning more than 10% of a class of our stock that is regularly traded on an established securities market during the one-year period ending on the date of the capital gain dividend. ii.
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Employees and Human Capital The Company is headquartered in Bethesda, Maryland. As of December 31, 2024, we employed 34 full-time employees and did not have any part-time employees . None of our employees are members of any union.
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The withholding rules under FIRPTA apply to a distribution paid by us in excess of a non-U.S. stockholder’s adjusted basis in our stock, unless the interest in our stock is not a United States real property interest (for example, because we are a domestically controlled qualified investment entity) or the distribution is paid to a “withholding qualified holder.” A “withholding qualified holder” means a qualified holder (as defined below) and a foreign partnership all of the interests of which are held by qualified holders, including through one or more partnerships. iii.
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We may incur losses, including material losses, due to uninsured risks, deductibles, or losses that exceed our coverage limits. -11- Table of Contents Available Information We maintain a website at the following address: www.drhc.com.
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The withholding rules under FIRPTA apply to any portion of a capital gain dividend paid to a non-U.S. stockholder that is attributable to the sale or exchange of a United States real property interest, unless it is paid to a withholding qualified holder.
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The fifth sentence of the third paragraph under the heading “Material U.S. Federal Income Tax – Qualification as a REIT – Hotels” is hereby deleted.
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In the case of FIRPTA Withholding under clause (ii) above, the applicable withholding rate is currently 15%, and in the case of FIRPTA Withholding under clause (iii) above, the withholding rate is currently 21%.
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The sixth sentence of the same paragraph is hereby deleted and replaced with the following: “The furniture, fixtures and equipment owned by us (not through our TRS lessees) account for a small portion (under 15%), determined under the methodology described above) of the total rent we receive from our lessees.”
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For purposes of FIRPTA Withholding under clause (iii), whether a capital gain dividend is attributable to the sale or exchange of a United States real property interest is determined taking into account the general exception from FIRPTA distribution treatment for distributions paid to certain non-U.S. stockholders under which any distribution paid by us to a non-U.S. stockholder with respect to any class of stock which is regularly traded on an established securities market located in the United States is not treated as gain -12- Table of Contents recognized from the sale or exchange of a United States real property interest if such non-U.S. stockholder did not own more than 10% of such class of stock at any time during the one-year period ending on the date of such distribution.
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To the extent inconsistent, these Treasury Regulations supersede the discussion on withholding contained in the Base Disclosure under the heading “Material U.S. Federal Income Tax Considerations—Taxation of Non-U.S.
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Stockholders Holding Capital Stock.” However, if, notwithstanding these Treasury Regulations, we encounter difficulties in properly characterizing a distribution for purposes of the withholding rules, we may decide to withhold on such distribution at the highest possible U.S. federal withholding rate that we determine could apply. Additionally, the first sentence of the seventh paragraph under the heading “Material U.S.
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Stockholders Holding Capital Stock—Distributions” is hereby deleted and replaced with the following: Distributions to a non-U.S. stockholder that we designate as capital gain dividends but that are not attributable to gain from our sale or exchange of United States real property interests (and thus not subject to FIRPTA Withholding) will be subject to U.S. federal income taxation if (i) the capital gain dividend is effectively connected with the non-U.S. stockholder’s United States trade or business, in which case the non-U.S. stockholder will be subject to the same treatment as U.S. stockholders with respect to such gain and may be subject to the 30% branch profits tax in the case of a non-U.S. stockholder that is a non-U.S. corporation, or (ii) the non-U.S. stockholder is a nonresident alien individual who was present in the United States for 183 days or more during the taxable year and meets certain other criteria, in which case the non-U.S. stockholder will incur a 30% tax on the individual’s capital gains derived from sources within the United States for the taxable year.
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The final Treasury Regulations also provide new guidance regarding qualified foreign pension funds. Accordingly, the second paragraph under the heading “Material U.S. Federal Income Tax Considerations—Taxation of Non-U.S.
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Stockholders Holding Capital Stock—Special FIRPTA Rules” is hereby deleted and replaced with the following: Generally, for purposes of FIRPTA, and subject to the discussion below regarding “qualified holders,” neither a “qualified foreign pension fund” (as defined below) nor any entity all of the interests of which are held by a qualified foreign pension fund is treated as a foreign person, thereby exempting such entities from tax under FIRPTA.
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A “qualified foreign pension fund” is an organization or arrangement (i) created or organized in a foreign country, (ii) established by a foreign country (or one or more political subdivisions thereof) or one or more employers to provide retirement or pension benefits to current or former employees (including self-employed individuals) or their designees as a result of, or, in consideration for, services rendered, (iii) which does not have a single participant or beneficiary that has a right to more than 5% of its assets or income, (iv) which is subject to government regulation and with respect to which annual information about its beneficiaries is provided, or is otherwise available, to relevant local tax authorities, and (v) with respect to which, under its local laws, (A) contributions that would otherwise be subject to tax are deductible or excluded from its gross income or taxed at a reduced rate, or (B) taxation of its investment income is deferred, or such income is excluded from its gross income or taxed at a reduced rate.
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Under Treasury Regulations, subject to the discussion below regarding “qualified holders,” a “qualified controlled entity” also is not generally treated as a foreign person for purposes of FIRPTA.
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A qualified controlled entity generally includes a trust or corporation organized under the laws of a foreign country all of the interests of which are held by one or more qualified foreign pension funds either directly or indirectly through one or more qualified controlled entities.
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Treasury Regulations further require that a qualified foreign pension fund or qualified controlled entity will not be exempt from FIRPTA with respect to dispositions of United States real property interests or REIT distributions attributable to the same unless the qualified foreign pension fund or qualified controlled entity is a “qualified holder.” To be a qualified holder, a qualified foreign pension fund or qualified controlled entity must satisfy one of two alternative tests at the time of the disposition of the United States real property interest or the REIT distribution.
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Under the first test, a qualified foreign pension fund or qualified controlled entity is a qualified holder if it owned no United States real property interests as of the earliest date during an uninterrupted period ending on the date of the disposition or distribution during which it qualified as a qualified foreign pension fund or qualified controlled entity.
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Alternatively, if a qualified foreign pension fund or qualified controlled entity held United States real property interests as of the earliest date during the period described in the preceding sentence, it can be a qualified holder only if it satisfies certain testing period requirements.
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Treasury Regulations also provide that a foreign partnership all of the interests of which are held by qualified holders, including through one or more partnerships, may certify its status as such and will not be treated as a foreign person for purposes of withholding under Section 1445 of the Code (and Section 1446 of the Code, as applicable). -13- Table of Contents Distributions that are attributable to gain from the sales of United States real property interests received by a qualified foreign pension fund or a qualified controlled entity that satisfies the requirements to be a qualified holder will not be subject to U.S. federal income or withholding tax.
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All other distributions received by a qualified foreign pension fund or a qualified controlled entity will be taxed as described above under “—Taxation of Non-U.S.
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Stockholders Holding Capital Stock—Distributions.” Gain of a qualified holder from the sale or exchange of our stock and distributions treated as gain from the sale or exchange of our stock under the rules described above under “—Taxation of Non-U.S.
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Stockholders Holding Capital Stock—Distributions,” will not be subject to U.S. federal income or withholding tax, unless such gain is treated as effectively connected with the qualified foreign pension fund’s (or the qualified controlled entity’s, as applicable) conduct of a U.S. trade or business, in which case, the qualified foreign pension fund (or qualified controlled entity) generally will be subject to a tax at the same graduated rates applicable to U.S. stockholders, unless an applicable income tax treaty provides otherwise, and may be subject to the 30% branch profits tax on its effectively connected earnings and profits, subject to adjustments, in the case of a foreign corporation.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe market price of our common stock has been highly volatile in the past, and investors in our common stock may experience a decrease in the value of their shares, including decreases unrelated to our operating performance or prospects. In the past, securities class action litigation has often been instituted against companies following periods of volatility in their stock price.
Biggest changeThe market price of our common stock has been volatile and could decline, resulting in a substantial or complete loss on our common stockholders’ investment. -31- Table of Contents The market price of our common stock has been highly volatile in the past, and investors in our common stock may experience a decrease in the value of their shares, including decreases unrelated to our operating performance or prospects.
Additionally, even in the absence of direct physical damage to our hotels, the occurrence of any natural disasters, terrorist attacks, significant military actions, outbreaks of pandemics or diseases, such as Zika, Ebola, COVID-19, H1N1 or other similar viruses, or severe weather, extreme temperatures or a changing climate in the area of any of our hotels, will likely have a material adverse effect on business and commercial travelers and tourists, the economy generally and the hotel and tourism industries in particular.
Additionally, even in the absence of direct physical damage to our hotels, the occurrence of any natural disasters, terrorist attacks, significant military actions, outbreaks of pandemics or other diseases, such as Zika, Ebola, COVID-19, H1N1 or other similar viruses, or severe weather, extreme temperatures or a changing climate in the area of any of our hotels, will likely have a material adverse effect on business and commercial travelers and tourists, the economy generally and the hotel and tourism industries in particular.
We cannot predict the outcome of any arbitration or litigation, the effect of any negative judgment against us or the amount of any settlement that we may enter into with any franchisor other third-party hotel manager.
We cannot predict the outcome of any arbitration or litigation, the effect of any negative judgment against us or the amount of any settlement that we may enter into with any franchisor or other third-party hotel manager.
Even if we successfully complete hotel acquisitions, there can be no assurance that we will be able to successfully integrate the hotels we acquire into our existing operations or otherwise realize the expected benefits of these acquisitions.
Even if we successfully complete hotel acquisitions, there can be no assurance that we will be able to successfully integrate the hotels we acquire into our existing operations or otherwise realize the expected benefits of these acquisitions.
The formation of our TRSs and TRS lessees increases our overall tax liability. Overall, no more than 20% of the value of a REIT’s assets may consist of stock or securities of one or more TRSs. Our domestic TRSs are subject to U.S. federal and state income tax on their taxable income.
The formation of our TRSs and TRS lessees increases our overall tax liability. Overall, no more than 20% of the value of a REIT’s assets may consist of stock or securities of one or more TRS. Our domestic TRS are subject to U.S. federal and state income tax on their taxable income.
If anyone transfers or owns shares in a way that would violate the aggregate share ownership limit, the common share ownership limit, or the preferred share ownership limit (unless such ownership limits have been waived by our board of directors), or would prevent us from continuing to qualify as a REIT under the U.S. federal income tax laws, those shares instead will be transferred to a trust for the benefit of a charitable beneficiary and will be either redeemed by us or sold to a person whose ownership of the shares will not violate the aggregate share ownership limit, the common share ownership limit, or the preferred share ownership limit.
If anyone transfers or owns shares in a way that would violate the aggregate share ownership limit, the common share ownership limit, or the preferred share ownership limit (unless such ownership limits have been waived by our board of directors), or would prevent us from continuing to qualify as a REIT under the U.S. federal income tax laws, those shares instead will be transferred to a trust for the benefit of a charitable beneficiary and will be either redeemed by us or sold to a person whose ownership of the shares will not violate the aggregate share ownership limit, the common share ownership limit, or the preferred share ownership limit (as applicable).
Our success depends in part upon our third-party managers’ ability to attract, motivate and retain a sufficient number of qualified employees. Qualified individuals needed to fill these positions are in increasingly short supply in some areas. The inability to recruit and retain these individuals may adversely impact hotel operations and guest satisfaction, which could harm our business.
Our success depends in part upon our third-party managers’ ability to attract, motivate and retain a sufficient number of qualified employees. Qualified individuals needed to fill these positions are in short supply in some areas. The inability to recruit and retain these individuals may adversely impact hotel operations and guest satisfaction, which could harm our business.
However, these insurance policies may not be adequate to cover all loses relating to cybersecurity incidents. Despite various precautionary steps to protect our hotels from losses resulting from cybersecurity incidents, any occurrence of a cybersecurity incident could still result in losses at our properties, which could affect our results of operations.
However, these insurance policies may not be adequate to cover all losses relating to cybersecurity incidents. Despite various precautionary steps to protect our hotels from losses resulting from cybersecurity incidents, any occurrence of a cybersecurity incident could still result in losses at our properties, which could affect our results of operations.
In the event of natural disasters caused by climate change or otherwise, terrorist attacks, active shooter attacks, significant military actions, outbreaks of contagious diseases or other events for which we may not have adequate insurance, our operations may suffer.
In the event of natural disasters caused by climate change or otherwise, terrorist attacks, active shooter incidents, significant military actions, outbreaks of contagious diseases or other events for which we may not have adequate insurance, our operations may suffer.
We believe that our operating partnership will continue to be treated for U.S. federal income tax purposes as a partnership and not as an association or as a publicly traded partnership taxable as a corporation. As a partnership, the operating partnership will not be subject to U.S. federal income tax on its income.
We believe that our operating partnership will continue to be treated for U.S. federal income tax purposes as a partnership and not as an association or as a publicly traded partnership taxable as a corporation. As a partnership, the operating partnership generally will not be subject to U.S. federal income tax on its income.
Furthermore, unless we purchase a fee simple interest in the land and improvements subject to our ground leases, we will not have any economic interest in the land or improvements at the expiration of our ground leases and therefore we generally will not share in any increase in value of the land or improvements beyond the term of a ground lease, notwithstanding our capital outlay to purchase our interest in the hotel or fund improvements thereon, and will lose our right to use the hotel. -22- Table of Contents The failure of tenants to make rent payments under our retail and restaurant leases may adversely affect our results of operation.
Furthermore, unless we purchase a fee simple interest in the land and improvements subject to our ground leases, we will not have any economic interest in the land or improvements at the expiration of our ground leases and therefore we generally will not share in any increase in value of the land or improvements beyond the term of a ground lease, notwithstanding our capital outlay to purchase our interest in the hotel or fund improvements thereon, and will lose our right to use the hotel. -20- Table of Contents The failure of tenants to make rent payments under our retail and restaurant leases may adversely affect our results of operation.
We hold a leasehold or subleasehold interest in all or a portion of the land underlying eight of our hotels owned as of December 31, 2023 (Embassy Suites by Hilton Bethesda, Courtyard New York Manhattan/Fifth Avenue, Salt Lake City Marriott Downtown at City Creek, Westin Boston Seaport District, Hotel Clio, Orchards Inn Sedona, Hotel Palomar Phoenix, and Cavallo Point), and a parking area near the Bourbon Orleans Hotel.
We hold a leasehold or subleasehold interest in all or a portion of the land underlying eight of our hotels owned as of December 31, 2024 (Embassy Suites by Hilton Bethesda, Courtyard New York Manhattan/Fifth Avenue, Salt Lake City Marriott Downtown at City Creek, Westin Boston Seaport District, Hotel Clio, Orchards Inn Sedona, Hotel Palomar Phoenix, and Cavallo Point), and a parking area near the Bourbon Orleans Hotel.
An adverse result in any of these proceedings could materially and adversely affect our revenues and profitability. -21- Table of Contents If we were to lose a brand license at one or more of our hotels, the value of the affected hotels could decline significantly and we could incur significant costs to obtain new franchise licenses, which could materially and adversely affect our results of operations and profitability as well as limit or slow our future growth.
An adverse result in any of these proceedings could materially and adversely affect our revenues and profitability. -19- Table of Contents If we were to lose a brand license at one or more of our hotels, the value of the affected hotels could decline significantly and we could incur significant costs to obtain new franchise licenses, which could materially and adversely affect our results of operations and profitability as well as limit or slow our future growth.
COVID-19 materially and adversely affected, and COVID-19 or any future pandemic, epidemic or outbreak of any other highly infectious disease may materially and adversely affect, our business, financial condition and results of operations, and our ability to pay dividends, and may also have the effect of heightening many of the risks described below and within this “Risk Factors” section, including: • a complete or partial closure or re-closure of, or other operational issues at, one or more of our hotels resulting from government, third-party hotel manager or franchisor action, which could materially adversely affect our operations; • the postponement or cancellation of conferences, conventions, festivals, sporting events, public events and other group business that would have otherwise brought individuals to the cities in which our hotels are located, which could cause a decrease in occupancy rates over a prolonged period of time and exacerbate the seasonal volatility at our hotels; • a general decline of in-person business meetings and an increase in the use of teleconferencing and video-conference technology, which could cause a sustained shift away from business-related travel and have a material adverse effect on the overall demand for hotel rooms; and -18- Table of Contents • a decrease in individuals’ willingness to travel as a result of the public health risks and social impacts of such outbreak or a decrease in consumer spending, which could affect the ability of our hotels to generate sufficient revenues to meet operating and other expenses in the short- and long-term.
Any future pandemic, epidemic or outbreak of any other highly infectious disease may materially and adversely affect, our business, financial condition and results of operations, and our ability to pay dividends, and may also have the effect of heightening many of the risks described below and within this “Risk Factors” section, including: • a complete or partial closure or re-closure of, or other operational issues at, one or more of our hotels resulting from government, third-party hotel manager or franchisor action, which could materially adversely affect our operations; • the postponement or cancellation of conferences, conventions, festivals, sporting events, public events and other group business that would have otherwise brought individuals to the cities in which our hotels are located, which could cause a decrease in occupancy rates over a prolonged period of time and exacerbate the seasonal volatility at our hotels; • a general decline in in-person business meetings and an increase in the use of teleconferencing and video-conference technology, which could cause a sustained shift away from business-related travel and have a material adverse effect on the overall demand for hotel rooms; and • a decrease in individuals’ willingness to travel as a result of the public health risks and social impacts of such outbreak or a decrease in consumer spending, which could affect the ability of our hotels to generate sufficient revenues to meet operating and other expenses in the short- and long-term.
In order to meet these tests, we may be required to forgo attractive business or investment opportunities. For example, we may not lease to our TRS any hotel which contains gaming. Thus, compliance with the REIT requirements may hinder our ability to operate solely to maximize profits. To qualify as a REIT, we must meet annual distribution requirements.
In order to meet these tests, we may be required to forgo attractive business or investment opportunities. For example, we may not lease to our TRS any hotel that contains gaming. Thus, compliance with the REIT requirements may hinder our ability to operate solely to maximize profits. To qualify as a REIT, we must meet annual distribution requirements.
A stall in economic growth or an economic recession could have a material adverse effect on our results of operations. When a property's occupancy or room rates drop to the point where its revenues are less than its operating expenses, we are required to spend additional funds in order to cover that property's operating expenses.
A stall in economic growth or an economic recession could have a materially adverse effect on our results of operations. When a property's occupancy or room rates drop to the point where its revenues are less than its operating expenses, we are required to spend additional funds in order to cover that property's operating expenses.
In addition, the real estate market is affected by many factors that are beyond our control, including: • adverse changes in international, national, regional and local economic and market conditions; • changes in supply of competitive hotels; • changes in interest rates and in the availability, cost and terms of debt financing; • changes in tax laws and property tax rates, or an increase in the assessed valuation of a property for real estate tax purposes; • changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance with laws and regulations, fiscal policies and ordinances; • fluctuations in foreign currency exchange rates; • the ongoing need for capital improvements, particularly in older structures; • changes in operating expenses; and • pandemics and the outbreak of diseases, federal, state and local government shutdowns, airline strikes, civil unrest, active shooter attacks, acts of God, including earthquakes, floods, wildfires, hurricanes and other natural disasters and acts of war or terrorism and their consequences, which may result in uninsured losses.
In addition, the real estate market is affected by many factors that are beyond our control, including: • adverse changes in international, national, regional and local economic and market conditions; • changes in supply of competitive hotels; • changes in interest rates and in the availability, cost and terms of debt financing; • changes in tax laws and property tax rates, or an increase in the assessed valuation of a property for real estate tax purposes; • changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance with laws and regulations, fiscal policies and ordinances; -14- Table of Contents • fluctuations in foreign currency exchange rates; • the ongoing need for capital improvements, particularly in older structures; • changes in operating expenses; and • pandemics and the outbreak of diseases, federal, state and local government shutdowns, airline strikes, civil unrest, active shooter attacks, acts of God, including earthquakes, floods, wildfires, hurricanes and other natural disasters and acts of war or terrorism and geopolitical events and their consequences which may result in uninsured losses.
Our success depends on senior executive officers whose continued service is not guaranteed, and changes in our senior executive officers may adversely affect the operation of our business. We depend on the efforts and expertise of our senior executive officers to manage our day-to-day operations and strategic business direction. Finding suitable replacements for senior executive officers could be difficult.
Our success depends on senior executive officers whose continued service is not guaranteed, and changes in our senior executive officers may adversely affect the operation of our business. We depend on the efforts and expertise of our senior executive officers to manage our day-to-day operations and strategic business direction. Finding suitable replacements for senior executive officers can be difficult.
If we evict a tenant, we also face the risk of delay or inability to find a suitable tenant or replacement tenant that suits the needs of our hotel. We face competition for hotel acquisitions and investments, and we may not be successful in identifying or completing hotel acquisitions and investments that meet our criteria, which may impede our growth.
If we evict a tenant, we also face the risk of delay or inability to find a suitable tenant or replacement tenant that suit the needs of our hotel. We face competition for hotel acquisitions and investments, and we may not be successful in identifying or completing hotel acquisitions and investments that meet our criteria, which may impede our growth.
We believe that we are qualified to be taxed as a REIT for U.S. federal income tax purposes for our taxable year ended December 31, 2023, and we expect to continue to qualify as a REIT for future taxable years, but we cannot assure you that we have qualified, or will remain qualified, as a REIT.
We believe that we are qualified to be taxed as a REIT for U.S. federal income tax purposes for our taxable year ended December 31, 2024, and we expect to continue to qualify as a REIT for future taxable years, but we cannot assure you that we have qualified, or will remain qualified, as a REIT.
In the event that a tenant continually fails to make rent payments, the security deposits may be applied in full to the non-payment of rents, but we face the risk of being able to recover only a portion of the rents due to us or being unable to recover any amounts whatsoever.
In the event that a tenant continually fails to make rent payments, the security deposits may be applied in full to the non-payment of rents, but we face the risk of being unable to recover a portion of the rents due to us or being unable to recover any amounts whatsoever.
In addition, the acquisition and subsequent integration of the additional hotels into our existing portfolio may require significant -23- Table of Contents time and focus from our management team and may divert attention from the day-to-day operations of our business, which could delay the achievement of our strategic objectives.
In -21- Table of Contents addition, the acquisition and subsequent integration of the additional hotels into our existing portfolio may require significant time and focus from our management team and may divert attention from the day-to-day operations of our business, which could delay the achievement of our strategic objectives.
As of December 31, 2023, 4,760,000 shares of our Series A Preferred Stock were issued and outstanding. The aggregate liquidation preference with respect to the outstanding preferred stock is approximately $119.0 million and aggregate annual dividends on these shares are approximately $9.8 million.
As of December 31, 2024, 4,760,000 shares of our Series A Preferred Stock were issued and outstanding. The aggregate liquidation preference with respect to the outstanding preferred stock is approximately $119.0 million and aggregate annual dividends on these shares are approximately $9.8 million.
The conversation of the Series A Preferred Stock would dilute the stockholder ownership in our Company and common OP unit holder ownership in our operating partnership and could adversely affect the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities.
The conversion of the Series A Preferred Stock would dilute the stockholder ownership in our Company and common OP unit holder ownership in our operating partnership and could adversely affect the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities.
We are subject to franchise agreements at certain of our properties, with remaining terms of up to 27 years, inclusive of renewal periods that are exercisable at the option of the franchisor. See Item 2, Properties, for hotel management and franchise agreement details.
We are subject to franchise agreements at certain of our properties, with remaining terms of up to 26 years, inclusive of renewal periods that are exercisable at the option of the franchisor. See Item 2, Properties, for hotel management and franchise agreement details.
In the event that we need to replace any of our hotel management companies pursuant to termination for cause or performance, we -20- Table of Contents may experience significant disruptions at the affected properties and the new management companies may not meet our performance expectations, which may have a material adverse effect on our business, financial condition, results of operations and our ability to make distributions to our stockholders.
In the event that we need to replace any of our hotel management companies pursuant to termination for cause or performance, we may experience significant disruptions at the affected properties and the new management companies may not meet our performance expectations, which may have a material adverse effect on our business, financial condition, results of operations and our ability to make distributions to our stockholders.
In periods of weak demand, profitability is negatively affected by the relatively high fixed costs of operating premium full-service hotels as compared to other classes of hotels. -14- Table of Contents The occurrence of any of the foregoing factors could have a material adverse effect on our business, financial condition, results of operations and our ability to make distributions to our stockholders.
In periods of weak demand, profitability is negatively affected by the relatively high fixed costs of operating premium full-service hotels as compared to other classes of hotels. The occurrence of any of the foregoing factors could have a material adverse effect on our business, financial condition, results of operations and our ability to make distributions to our stockholders.
Several of our hotels are operated under franchise agreements and we are subject to the risks associated with the franchise brand and the costs associated with maintaining the franchise license. As of the date of this report, 22 of our 36 hotels operate under Marriott, Hilton or IHG franchise agreements.
Several of our hotels are operated under franchise agreements and we are subject to the risks associated with the franchise brand and the costs associated with maintaining the franchise license. As of the date of this report, 19 of our 36 hotels operate under Marriott, Hilton, or IHG franchise agreements.
The more favorable rates applicable to regular corporate dividends could cause investors who are individuals to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay qualified dividend income, which could adversely affect the value of the stock of REITs, including our -30- Table of Contents common stock and Series A Preferred Stock.
The more favorable rates applicable to regular corporate dividends could cause investors who are individuals to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay qualified dividend income, which could adversely affect the value of the stock of REITs, including our common stock and Series A Preferred Stock.
As of December 31, 2023, 4,760,000 shares of our Series A Preferred Stock were outstanding and could be converted, upon the occurrence of limited specified change in control transactions, into shares of our common stock.
As of December 31, 2024, 4,760,000 shares of our Series A Preferred Stock were outstanding and could be converted, upon the occurrence of limited specified change in control transactions, into shares of our common stock.
In recent years, a significant percentage of hotel loans were made by lenders who sold such loans to securitized lending vehicles, such as commercial -24- Table of Contents mortgage backed security (“CMBS”) pools.
In recent years, a significant percentage of hotel loans were made by lenders who sold such loans to securitized lending vehicles, such as commercial -22- Table of Contents mortgage backed security (“CMBS”) pools.
Some of our hotels routinely handle and use hazardous or regulated substances and wastes as part of their operations, which substances and wastes are subject to regulation (e.g., swimming pool chemicals). Our hotels incur costs to comply with these laws and regulations and could be subject to fines and penalties for non-compliance.
Some of our hotels routinely handle and use hazardous or regulated substances and wastes as part of their operations, which substances and wastes are subject to regulation (e.g., swimming pool chemicals). Our hotels incur costs to comply with these laws and regulations, and could be subject to fines and penalties for noncompliance.
We may be unable to generate sufficient cash flows from our operations to make distributions to our stockholders at expected levels, and we cannot assure you of our ability to make distributions in the future. -32- Table of Contents We intend to pay quarterly dividends that represent at least 90% of our REIT taxable income.
We may be unable to generate sufficient cash flows from our operations to make distributions to our stockholders at expected levels, and we cannot assure you of our ability to make distributions in the future. We intend to pay quarterly dividends that represent at least 90% of our REIT taxable income.
In addition, certain litigation or the resolution of certain litigation may affect the availability or cost of -33- Table of Contents some of our insurance coverage, which could adversely impact our results of operations and cash flows, expose us to increased risks that would be uninsured and/or adversely impact our ability to attract officers and directors.
In addition, certain litigation or the resolution of certain litigation may affect the availability or cost of some of our insurance coverage, which could adversely impact our results of operations and cash flows, expose us to increased risks that would be uninsured and/or adversely impact our ability to attract officers and directors.
The increase in the use of third-party internet travel intermediaries and the increase in alternative lodging channels, such as Airbnb, could adversely affect our profitability. Many of our managers and franchisors contract with third-party internet travel intermediaries, including, but not limited to Expedia.com and Priceline.com and their subsidiaries.
The increase in the use of third-party internet travel intermediaries and the increase in alternative lodging channels, such as Airbnb, could adversely affect our profitability. -13- Table of Contents Many of our managers and franchisors contract with third-party internet travel intermediaries, including, but not limited to Expedia.com and Priceline.com and their subsidiaries.
We could be responsible for the costs associated with a contaminated property, including the costs to clean up a contaminated property or to defend against a claim, and such costs could have a material adverse effect on our results of -27- Table of Contents operations and financial condition and our ability to pay dividends to our stockholders.
We could be responsible for the costs associated with a contaminated property, including the costs to clean up a contaminated property or to defend against a claim, and such costs could have a material adverse effect on our results of operations and financial condition and our ability to pay dividends to our stockholders.
However, the effect of inflation on interest rates could increase our financing costs over time, either through near-term borrowings under our Credit Agreement or refinancing of our existing borrowings that may incur higher interest expenses related to the issuance of new debt.
However, the effect of inflation on interest rates could increase our financing costs over time, eit her through near-term borrowings under our Credit Agreement or refinancing of our existing borrowings that may incur higher interest expenses related to the issuance of new debt.
Eleven of our hotels are located in metropolitan markets that have been, or may in the future be, targets of actual or threatened terrorist attacks or active shooter attacks, including New York City, Chicago, Boston, San Francisco and Washington, D.C. These hotels are material to our financial results, having constituted 73% of our total revenues in 2023.
Eleven of our hotels are located in metropolitan markets that have been, or may in the future be, targets of actual or threatened terrorist attacks or active shooter attacks, including New York City, Chicago, Boston, San Francisco and Washington, D.C. These hotels are material to our financial results, having constituted 72% of our total revenues in 2024.
Certain of our operating expenses, including, but not limited to, labor costs, employee-related benefits, food, beverage and utility costs, repairs and maintenance expenses, property taxes and insurance premiums, have and may continue to negatively impact our business and results of operations.
Inflationary increases in certain of our operating expenses, including, but not limited to, labor costs, employee-related benefits, food, beverage and utility costs, repairs and maintenance expenses, property taxes and insurance premiums, have and may continue to negatively impact our business and results of operations.
In addition, the REIT rules generally prohibit a manager of one of our hotels from owning, directly or indirectly, more than 35% of our stock and a person who holds 35% or more of our stock from also holding, directly or indirectly, more than 35% of any such hotel management company.
In addition, the REIT rules generally prohibit a manager of one of our hotels from owning, directly or indirectly, more than 35% of our stock and a person who holds 35% or more of our stock -27- Table of Contents from also holding, directly or indirectly, more than 35% of any such hotel management company.
In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our stockholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws.
In addition, we will be subject to a 4% non-deductible excise tax if the actual amount that we pay out to our stockholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws.
Under those -19- Table of Contents circumstances, the insurance proceeds we receive might be inadequate to restore our economic position with regard to the damaged or destroyed property. We and our hotel managers rely on information technology in our operations and any material failures, inadequacies, interruptions, security failures, or cybersecurity incidents could harm our business.
Under those circumstances, the insurance proceeds we receive might be inadequate to restore our economic position with regard to the damaged or destroyed property. We and our hotel managers rely on information technology in our operations and any material failures, inadequacies, interruptions, security failures, or cybersecurity incidents could harm our business.
Because some of our hotels would have to be sold subject to the applicable agreement, the term length of an agreement may deter some potential purchasers and could adversely impact the price realized from any such sale.
Because some of our hotels would have to be sold subject to the applicable agreement, the term length of an agreement may deter some potential purchasers and could adversely impa ct the price realized from any such sale.
As a result of differences between cash flow and the accrual of income and expenses for tax purposes, or nondeductible expenditures, for example, our REIT taxable income in any given year could exceed our cash available for distribution.
As a result of differences between cash flow and the accrual of income and expenses for tax purposes, or non-deductible expenditures, for example, our REIT taxable income in any given year could exceed our cash available for distribution.
Four of our current management agreements are non-terminable, subject to certain exceptions for cause or failure to achieve certain performance targets.
Three of our current management agreements are non-terminable, subject to certain exceptions for cause or failure to achieve certain performance targets.
Some of our hotels are subject to rights of first offer that may limit our ability to sell our hotels. We are subject to a franchisor’s or operator’s right of first offer, in some instances under our franchise agreements or management agreements.
Some of our hotels are subject to rights of first offer that may limit our ability to sell our hotels. -15- Table of Contents We are subject to a franchisor’s or operator’s right of first offer, in some instances under our franchise agreements or management agreements.
See “Risk Factors—Risks Related to our Business and Operations—We are subject to risks associated with our ongoing need for renovations and capital improvements as well as financing for such expenditures.” In March 2022, the Federal Reserve began, and it has continued and may continue, to raise interest rates in an effort to curb inflation.
See “Risk Factors—Risks Related to our Business and Operations—We are subject to risks associated with our ongoing need for renovations and capital improvements as well as financing for such expenditures.” In March 2022, the Federal Reserve began to raise interest rates in an effort to curb inflation.
Unless we were entitled to relief under certain U.S. federal income tax laws, we could not re-elect REIT status until the fifth calendar year after the year in which we failed to qualify as a REIT.
Unless we were -26- Table of Contents entitled to relief under certain U.S. federal income tax laws, we could not re-elect REIT status until the fifth calendar year after the year in which we failed to qualify as a REIT.
Failure to meet our financial covenants could result from, among other things, changes in our results of operations, the incurrence of additional debt or changes in general economic conditions.
Failure to meet our financial covenants could result from, among other things, changes in our results of operations, incurring additional debt or changes in general economic conditions.
We currently rely, and will continue to rely, on these hotel management companies to adequately operate our hotel properties under the terms of the hotel management agreements.
We currently rely, and will continue to rely, on these hotel management companies to adequately -18- Table of Contents operate our hotel properties under the terms of the hotel management agreements.
In addition to fluctuations related to our business model, our hotels are, and will continue to be, subject to various long-term operating risks common to the hotel industry, many of which are beyond our control, including: • dependence on business and commercial travelers and tourism, both of which vary with consumer and business confidence in the strength of the economy; • decreases in the frequency of business travel that may result from alternatives to in-person meetings, including as post-COVID-19 pandemic norms continue to evolve; • competition from other hotels and alternative lodging channels located in the markets in which we own properties; • competition from third-party internet travel intermediaries; • an over-supply or over-building of hotels in the markets in which we own properties, which could adversely affect occupancy rates, revenues and profits at our hotels; • increases in energy and transportation costs and other expenses affecting travel, which may affect travel patterns and reduce the number of business and commercial travelers and tourists; • increases in operating costs due to inflation and other factors that may not be offset by increased room rates; and • changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance.
In addition to fluctuations related to our business model, our hotels are, and will continue to be, subject to various long-term operating risks common to the hotel industry, many of which are beyond our control, including: -12- Table of Contents • dependence on business and commercial travelers and tourism, both of which vary with consumer and business confidence in the strength of the economy; • decreases in the frequency of business travel that may result from alternatives to in-person meetings and a sustained increase in hybrid or remote work arrangements; • competition from other hotels and alternative lodging channels located in the markets in which we own properties; • competition from third-party internet travel intermediaries; • an over-supply or over-building of hotels in the markets in which we own properties, which could adversely affect occupancy rates, revenues and profits at our hotels; • increases in energy and transportation costs and other expenses affecting travel, which may affect travel patterns and reduce the number of business and commercial travelers and tourists; • increases in operating costs due to inflation and other factors that may not be offset by increased room rates; and • changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance.
Our bylaws provide that (a) with respect to an annual meeting of stockholders, nominations of individuals for election to our board of directors and the proposal of other business to be considered by stockholders may be made only (i) pursuant to our notice of the meeting, (ii) by the board of directors or (iii) by a stockholder who is entitled to vote at the meeting and has complied with the advance notice procedures set forth in the bylaws and (b) with respect to special meetings of stockholders, only the business specified in our notice of meeting may be brought before the meeting of stockholders and nominations of individuals for election to the board of directors may be made only (A) by the board of directors or (B) provided that the board of directors has determined that directors shall be elected at such meeting by a stockholder who is entitled to vote at the meeting and has complied with the advance notice provisions set forth in the bylaws.
Certain advance notice provisions of our bylaws may limit the ability of a third party to acquire control of our company. -29- Table of Contents Our bylaws provide that (a) with respect to an annual meeting of stockholders, nominations of individuals for election to our board of directors and the proposal of other business to be considered by stockholders may be made only (i) pursuant to our notice of the meeting, (ii) by the board of directors or (iii) by a stockholder who is entitled to vote at the meeting and has complied with the advance notice procedures set forth in the bylaws and (b) with respect to special meetings of stockholders, only the business specified in our notice of meeting may be brought before the meeting of stockholders and nominations of individuals for election to the board of directors may be made only (A) by the board of directors or (B) provided that the board of directors has determined that directors shall be elected at such meeting by a stockholder who is entitled to vote at the meeting and has complied with the advance notice provisions set forth in the bylaws.
Our typical debt contains limited principal amortization; therefore, the vast majority of the principal must be repaid at the maturity of the loan in a so-called “balloon payment.” In the event that we do not have sufficient funds to repay the debt at the maturity of these loans, we will need to refinance this debt.
There is refinancing risk associated with our debt. -23- Table of Contents Our typical debt contains limited principal amortization; therefore, the vast majority of the principal must be repaid at the maturity of the loan in a so-called “balloon payment.” In the event that we do not have sufficient funds to repay the debt at the maturity of these loans, we will need to refinance this debt.
Increases in interest rates may increase our interest expense. Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions and policies of various governmental and regulatory agencies. For instance, during 2022 and 2023 the U.S.
Increases in interest rates may increase our interest expense. -24- Table of Contents Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions and policies of various governmental and regulatory agencies. For instance, following consistent rate increases throughout 2022 and 2023, the U.S.
Our hotel managers are responsible for hiring and maintaining the labor force at each of our hotels. From time to time, strikes, lockouts, public demonstrations or other negative actions and publicity may disrupt hotel operations at any of our hotels, negatively impact our reputation or the reputation of our brands, or harm relationships with the labor forces at our hotels.
From time to time, strikes, lockouts, public demonstrations or other negative actions and publicity may disrupt hotel operations at any of our hotels, negatively impact our reputation or the reputation of our brands, or harm relationships with the labor forces at our hotels.
You may be restricted from transferring our common stock and Series A Preferred Stock. -29- Table of Contents In order to maintain our REIT qualification, among other requirements, no more than 50% in value of our outstanding stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the U.S. federal income tax laws to include certain entities) during the last half of any taxable year.
In order to maintain our REIT qualification, among other requirements, no more than 50% in value of our outstanding stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the U.S. federal income tax laws to include certain entities) during the last half of any taxable year.
Our direct exposure to increases in interest rates in the short term is limited to our unhedged variable rate debt, which amounted to approximately $475.0 million as of December 31, 2023.
Our direct exposu re to increases in interest rates in the short term is limited to our unhedged variable rate debt, which amounted to approximately $575.0 million as of December 31, 2024.
The full extent to which any future pandemic, epidemic or outbreak of any highly infectious disease impacts our operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of such pandemic, the emergence and characteristics of new variants, the actions taken to contain the pandemic or mitigate its impact, including the adoption, administration and effectiveness of available vaccines, and the direct and indirect economic effects of the pandemic and containment measures, among others.
Any future pandemic, epidemic or outbreak of any highly infectious disease, could cause widespread disruptions to the U.S. and global economy and volatility and negative pressure in financial markets. -16- Table of Contents The full extent to which any future pandemic, epidemic or outbreak of any highly infectious disease impacts our operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of such pandemic, the emergence and characteristics of variants, the actions taken to contain the pandemic or mitigate its impact, including the adoption, administration and effectiveness of available vaccines, and the direct and indirect economic effects of the pandemic and containment measures, among others.
In addition, some non-REIT corporations may choose to pay dividends or increase dividends as a result of the lower corporate income tax rate that is effective for taxable years beginning after December 31, 2017. As a result, the trading price of our common stock and Series A Preferred Stock may be negatively impacted.
In addition, some non-REIT corporations may choose to pay dividends or increase dividends as a result of the lower corporate income tax rate that is effective for taxable years beginning after December 31, 2017.
Our board of directors will make determinations regarding distributions based upon many facts, including our financial performance, our debt service obligations, our debt covenants, our capital expenditure requirements, the requirements for qualification as a REIT and other factors that our board of directors may deem relevant from time to time.
Our board of directors has the sole discretion to determine the timing, form and amount of any distribution to our stockholders and will make determinations regarding distributions based -30- Table of Contents upon many facts, including our financial performance, our debt service obligations, our debt covenants, our capital expenditure requirements, the requirements for qualification as a REIT and other factors that our board of directors may deem relevant from time to time.
Preferred stock and debt, if issued, could have a preference on liquidating distributions or a preference on dividend or interest payments that could limit our ability to make distributions to the holders of our common stock.
Holders of our common stock are not entitled to preemptive rights or other protections against dilution. Preferred stock and debt, if issued, could have a preference on liquidating distributions or a preference on dividend or interest payments that could limit our ability to make distributions to the holders of our common stock.
In addition, repurchases of our common stock pursuant to our share repurchase program could affect our stock price and increase its volatility. The existence or use of our share repurchase program may cause our stock price to be higher than it would otherwise be, and could potentially reduce the market liquidity for our stock.
The existence or use of our share repurchase program may cause our stock price to be higher than it would otherwise be, and could potentially reduce the market liquidity for our stock.
Issuances of additional shares of stock may have the effect of delaying, deferring or preventing a transaction or a change in control of our company that might involve a premium to the market price of our common stock or otherwise be in our stockholders’ best interests. -31- Table of Contents Certain advance notice provisions of our bylaws may limit the ability of a third party to acquire control of our company.
Issuances of additional shares of stock may have the effect of delaying, deferring or preventing a transaction or a change in control of our company that might involve a premium to the market price of our common stock or otherwise be in our stockholders’ best interests.
In order to remain competitive, our hotels have an ongoing need for renovations and other capital improvements, including replacements, from time to time, of furniture, fixtures and equipment.
We are subject to risks associated with our ongoing need for renovations and capital improvements as well as financing for such expenditures. In order to remain competitive, our hotels have an ongoing need for renovations and other capital improvements, including replacements, from time to time, of furniture, fixtures and equipment.
We might need to borrow money or sell assets in order to pay any such tax. Also, we would not be allowed a deduction for dividends paid to our stockholders in computing our taxable income and we would no longer be compelled to make distributions under the Code.
Also, we would not be allowed a deduction for dividends paid to our stockholders in computing our taxable income and we would no longer be compelled to make distributions under the Code.
Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, our stockholders bear the risk of our future offerings reducing the market price of our common stock and diluting their interest.
Because our decision to issue securities in any future offering will -32- Table of Contents depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings.
In addition, the total amount of costs and expenses that may be incurred with respect to the unknown or contingent liabilities may exceed our expectations, and we may experience other unanticipated adverse effects, all of which could materially and adversely affect our operating results and cash flows. -17- Table of Contents We are subject to risks associated with our ongoing need for renovations and capital improvements as well as financing for such expenditures.
In addition, the total amount of costs and expenses that may be incurred with respect to the unknown or contingent liabilities may exceed our expectations, and we may experience other unanticipated adverse effects, all of which could materially and adversely affect our operating results and cash flows.
This type of litigation could result in substantial costs and divert our management’s attention and resources. Future issuances of our common stock, Series A Preferred Stock or our operating partnership’s common OP units, may depress the market price of our common stock and have a dilutive effect on our existing stockholders.
Future issuances of our common stock, Series A Preferred Stock or our operating partnership’s common OP units, may depress the market price of our common stock and have a dilutive effect on our existing stockholders.
As of December 31, 2023, -25- Table of Contents we had no cash traps in place. However, the triggering of cash traps in the future could affect our liquidity and our ability to make distributions to our stockholders. There is refinancing risk associated with our debt.
As of December 31, 2024, we had no cash traps in place. However, the triggering of cash traps in the future could affect our liquidity and our ability to make distributions to our stockholders.
If our future earnings or cash distributions are less than expected, it is likely that the market price of our common stock will diminish. In addition, interest rates were at historically low levels for an extended period of time but increased significantly in recent years and may continue to increase in the near term.
If our future earnings or cash distributions are less than expected, it is likely that the market price of our common stock will diminish. In addition, interest rates have increased significantly in recent years and may remain elevated in the near term.
If our leases are not respected as true leases for U.S. federal income tax purposes, we will fail to qualify as a REIT.
If our leases are not respected as true leases for U.S. federal income tax purposes, we will fail to qualify as a REIT. You may be restricted from transferring our common stock and Series A Preferred Stock.
If we violate covenants in our future indebtedness agreements, we could be required to repay all or a portion of our indebtedness before maturity at a time when we might be unable to arrange financing for such repayment on favorable terms, if at all. -26- Table of Contents Refinanced debt could reduce the amounts available for distribution to our stockholders, as well as reduce funds available for our operations, future investment opportunities or other purposes.
If we violate covenants in our future indebtedness agreements, we could be required to repay all or a portion of our indebtedness before maturity at a time when we might be unable to arrange financing for such repayment on favorable terms, if at all.
Additionally, we regularly incur costs to comply with environmental laws and we cannot assure you that future laws or regulations will not impose material environmental liabilities or that the current environmental condition of our hotels will not be affected by the condition of the properties in the vicinity of our hotels (such as the presence of leaking underground storage tanks) or by third parties unrelated to us.
Additionally, we regularly incur costs to comply with environmental laws and we cannot assure you that future laws or regulations will not impose material environmental liabilities or that the current environmental condition of our hotels will not be affected by the condition of the properties in the vicinity of our hotels (such as the presence of leaking underground storage tanks) or by third parties unrelated to us. -25- Table of Contents Climate change In recent years, numerous treaties, laws and regulations have been enacted to regulate or limit carbon emissions and, as a result, we are subject to the risks associated with such transitional effects to a low carbon scenario.
Various types of catastrophic losses, like earthquakes, floods, wildfires, losses from foreign terrorist activities, or losses from domestic terrorist activities may not be insurable or are generally not insured because of economic infeasibility, legal restrictions or the policies of insurers. Future lenders may require such insurance, and our failure to obtain such insurance could constitute a default under loan agreements.
Various types of catastrophic losses, like earthquakes, floods, wildfires, losses from foreign terrorist activities, or losses from domestic terrorist activities may not be insurable or are generally not insured because of economic infeasibility, legal restrictions or the policies of insurers.
Certain of our current hotel management and franchise agreements are long-term. All but four of our hotel management agreements are terminable at our option. The remaining four hotel management agreements have remaining terms ranging from approximately four years to 35 years, inclusive of renewal periods that are exercisable at the option of the property manager.
The remaining three hotel management agreements have remaining terms ranging from approximately three years to 34 years, inclusive of renewal periods that are exercisable at the option of the property manager.
Failure of our operating partnership to be taxable as a partnership could cause us to fail to qualify as a REIT and we could suffer other adverse tax consequences.
As a result, the trading price of our common stock and Series A Preferred Stock may be negatively impacted. -28- Table of Contents Failure of our operating partnership to be taxable as a partnership could cause us to fail to qualify as a REIT and we could suffer other adverse tax consequences.
We compete based on a number of factors, including room rates, quality of accommodations, service levels, convenience of location, reputation, reservation systems, brand recognition and supply and availability of alternative lodging and event space.
We compete based on a number of factors, including room rates, quality of accommodations, service levels, convenience of location, reputation, reservation systems, brand recognition and supply and availability of alternative lodging and event space. Increasing use of these alternative facilities could materially adversely affect the occupancy at our hotels and could put downward pressure on average rates and revenues.
Upon -34- Table of Contents liquidation, holders of our debt securities and shares of preferred stock and lenders with respect to other borrowings will receive a distribution of our available assets prior to the holders of our common stock.
Upon liquidation, holders of our debt securities and shares of preferred stock and lenders with respect to other borrowings will receive a distribution of our available assets prior to the holders of our common stock. Additional equity offerings could significantly dilute the holdings of our existing stockholders or reduce the market price of our common stock, or both.
The timing, manner, price and actual number of shares repurchased under our share repurchase program will depend on a variety of factors including stock price, corporate and regulatory requirements, market conditions, and other corporate liquidity requirements and priorities. Our share repurchase program may be limited, suspended or terminated at any time without prior notice.
Share repurchases could also increase the volatility of the price of our common stock and could diminish our cash reserves. The timing, manner, price and actual number of shares repurchased under our share repurchase program will depend on a variety of factors including stock price, corporate and regulatory requirements, market conditions, and other corporate liquidity requirements and priorities.
These facts and any others that would impede our ability to respond to adverse changes in the performance of our hotel properties could have a material adverse effect on our operating results and financial condition, as well as our ability to make distributions to our stockholders. -16- Table of Contents Due to restrictions in our hotel management agreements, franchise agreements, mortgage agreements and ground leases, we may not be able to sell our hotels at the highest possible price, or at all.
These facts and any others that would impede our ability to respond to adverse changes in the performance of our hotel properties could have a material adverse effect on our operating results and financial condition, as well as our ability to make distributions to our stockholders.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur Audit Committee discusses DiamondRock’s cybersecurity program at least annually, and receives quarterly updates from internal audit or management on cybersecurity incidents or other developments. Our Board of Directors plays an important role in the risk oversight of the Company.
Biggest changeOur Audit Committee discusses DiamondRock’s cybersecurity program at least annually, and receives quarterly updates from internal audit or management on cybersecurity incidents or other developments. Our Audit Committee reports on these matters to our Board of Directors as needed. Our Board of Directors plays an important role in the risk oversight of the Company.
Our managed services provider reports periodically to our management team, including our Chief Accounting Officer & Treasurer and General Counsel & Chief Risk Officer. These senior executives then brief the Board on information regarding security matters at least quarterly. Additionally, we provide cybersecurity training for all Board members and senior executives.
Our managed services provider reports periodically to our management team, including our Chief Accounting Officer, Chief Financial Officer & Treasurer and General Counsel & Chief Risk Officer. These senior executives then brief the Board on information regarding security matters at least quarterly. Additionally, we provide cybersecurity training for all Board members and senior executives.
Our Board is involved in risk oversight through its direct decision-making authority with respect to significant matters and the oversight of management by the Board’s committees. Our Board also relies on management to bring significant matters impacting DiamondRock to its attention. -36- Table of Contents
Our Board is involved in risk oversight through its direct decision-making authority with respect to significant matters and the oversight of management by the Board’s committees. Our Board also relies on management to bring significant matters impacting DiamondRock to its attention. -34- Table of Contents
The Audit Committee administers its risk oversight function by receiving regular reports from members of senior management, including the Chief Accounting Office & Treasurer and General Counsel & Chief Risk Officer, on areas of material risk to the Company.
The Audit Committee administers its risk oversight function by receiving regular reports from members of senior management, including the Chief Accounting Officer, Chief Financial Officer & Treasurer and General Counsel & Chief Risk Officer, on areas of material risk to the Company.
For more information about the cybersecurity risks we face, see Item 1A "Risk Factors." Governance Related to Cybersecurity Risks DiamondRock engages a managed services provider, which includes vCISO and vCIO services, to assist DiamondRock with the identification, monitoring, and management of cybersecurity risks.
For more information about the cybersecurity risks we face, see Item 1A "Risk Factors." -33- Table of Contents Governance Related to Cybersecurity Risks DiamondRock engages a managed services provider, which includes vCISO and vCIO services, to assist DiamondRock with the identification, monitoring, and management of cybersecurity risks.
Our senior management reviews assessments performed by third-party assessors and our managed services provider to determine the appropriate treatment of identified risks. -35- Table of Contents We have also developed and have begun implementing a cyber risk management program for our third-party property managers.
Our senior management reviews assessments performed by third-party assessors and our managed services provider to determine the appropriate treatment of identified risks. We have also developed and implemented a cyber risk management program for our third-party property managers.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperty Manager Terminable Expiration Date of Current Term Number of Remaining Renewal Terms at Manager's Exclusive Option (1) Atlanta Marriott Alpharetta Aimbridge Hospitality At will with no fee 9/2025 None Bourbon Orleans Hotel Evolution Hospitality At will with no fee 7/2026 Month-to-month Cavallo Point, The Lodge at the Golden Gate Passport Resorts At will with fee 6/2028 None Chicago Marriott Downtown Magnificent Mile Marriott No 12/2038 Two ten-year periods Chico Hot Springs Resort & Day Spa EOS Hospitality At will with fee until 8/2024; at will with no fee thereafter 8/2033 Month-to-month Courtyard Denver Downtown Sage Hospitality At will with fee 7/2026 One five-year period Courtyard New York Manhattan/Fifth Avenue Highgate Hotels At will with no fee 10/2025 None Courtyard New York Manhattan/Midtown East HEI Hotels & Resorts At will with fee 8/2027 None Embassy Suites by Hilton Bethesda Sage Hospitality At will with no fee 2/2027 One five-year period The Gwen HEI Hotels & Resorts At will with fee 6/2026 None Havana Cabana Key West EOS Hospitality At will with no fee 5/2032 Month-to-month Henderson Beach Resort Aimbridge Hospitality At will with no fee 2/2032 Month-to-month Henderson Park Inn Aimbridge Hospitality At will with no fee 7/2026 Month-to-month The Dagny Boston (formerly Hilton Boston Downtown/Faneuil Hall) Aimbridge Hospitality At will with no fee 7/2025 None Hilton Burlington Lake Champlain Aimbridge Hospitality At will with no fee N/A Month-to-month Hilton Garden Inn New York/Times Square Central Highgate Hotels No 12/2024 One five-year period (2) Hotel Clio Sage Hospitality At will with fee 5/2026 One five-year period Hotel Emblem San Francisco Pacifica Hotels At will fee until 3/2025; at will with no fee thereafter 3/2028 T Two five-year periods Hotel Palomar Phoenix Kimpton Hotel & Restaurant Group At will with no fee 12/2028 One five-year period (3) The Hythe Vail Vail Resorts At will with fee 7/2024 None Kimpton Shorebreak Fort Lauderdale Beach Resort HEI Hotels & Resorts At will with no fee 3/2028 None Kimpton Shorebreak Huntington Beach Resort Kimpton Hotel & Restaurant Group At will with fee 2/2025 None Lake Austin Spa Resort EOS Hospitality At will with no fee 11/2032 Month-to-month The Landing Lake Tahoe Resort & Spa Evolution Hospitality At will with fee 9/2024 One five-year period L'Auberge de Sedona Evolution Hospitality At will with fee 10/2024 One five-year period The Lodge at Sonoma Resort Sage Hospitality At will with fee 9/2025 None Margaritaville Beach House Key West Ocean Properties No 7/2027 None Orchards Inn Sedona Evolution Hospitality At will with fee 10/2024 One five-year period The Lindy Renaissance Charleston Hotel Aimbridge Hospitality At will with no fee 9/2025 None Salt Lake City Marriott Downtown at City Creek HEI Hotels & Resorts At will with no fee 9/2025 None Tranquility Bay Beachfront Resort EOS Hospitality At will with no fee 4/2032 Month-to-month Westin Boston Seaport District Aimbridge Hospitality At will with no fee 1/2025 None Westin Fort Lauderdale Beach Resort HEI Hotels & Resorts At will with no fee 12/2027 None Westin San Diego Bayview Aimbridge Hospitality At will with no fee N/A Month-to-month Westin Washington D.C.
Biggest changeProperty Manager Terminable Expiration Date of Current Term Number of Remaining Renewal Terms at Manager's Exclusive Option (1) AC Hotel Minneapolis Downtown Sage Hospitality At will with no fee 11/2029 Five one-year periods Atlanta Marriott Alpharetta Aimbridge Hospitality At will with no fee 9/2025 None Bourbon Orleans Hotel Evolution Hospitality At will with no fee 7/2026 Month-to-month Cavallo Point, The Lodge at the Golden Gate Passport Resorts At will with fee 6/2028 None Chicago Marriott Downtown Magnificent Mile Marriott No 12/2038 Two ten-year periods Chico Hot Springs Resort & Day Spa EOS Hospitality At will with no fee 8/2033 Month-to-month Courtyard Denver Downtown Sage Hospitality At will with fee 7/2026 One five-year period Courtyard New York Manhattan/Fifth Avenue Highgate Hotels At will with no fee 10/2025 None Courtyard New York Manhattan/Midtown East HEI Hotels & Resorts At will with no fee 8/2027 None Embassy Suites by Hilton Bethesda Sage Hospitality At will with no fee 2/2027 One five-year period The Gwen HEI Hotels & Resorts At will with fee 6/2026 None Havana Cabana Key West EOS Hospitality At will with no fee 5/2032 Month-to-month Henderson Beach Resort Aimbridge Hospitality At will with no fee 2/2032 Month-to-month Henderson Park Inn Aimbridge Hospitality At will with no fee 7/2026 Month-to-month The Dagny Boston Aimbridge Hospitality At will with no fee 7/2025 None Hotel Champlain Burlington Aimbridge Hospitality At will with no fee 9/2029 Month-to-month Hilton Garden Inn New York/Times Square Central Highgate Hotels At will with no fee 10/2025 One five-year period (2) Hotel Clio Sage Hospitality At will with fee 5/2026 One five-year period Hotel Emblem San Francisco Pacifica Hotels At will fee until 3/2025; at will with no fee thereafter 3/2028 T Two five-year periods The Hythe Vail Vail Resorts At will with fee 3/2025 None Kimpton Hotel Palomar Phoenix Kimpton Hotel & Restaurant Group At will with no fee 12/2028 One five-year period (3) Kimpton Shorebreak Fort Lauderdale Beach Resort HEI Hotels & Resorts At will with no fee 3/2028 None Kimpton Shorebreak Huntington Beach Resort Kimpton Hotel & Restaurant Group At will with fee 2/2025 (4) None Lake Austin Spa Resort EOS Hospitality At will with no fee 11/2032 Month-to-month The Landing Lake Tahoe Resort & Spa Evolution Hospitality At will with fee 10/2029 None L'Auberge de Sedona Evolution Hospitality At will with fee 10/2029 None The Lodge at Sonoma Resort Sage Hospitality At will with fee 9/2025 None Margaritaville Beach House Key West Ocean Properties No 7/2027 None Orchards Inn Sedona Evolution Hospitality At will with fee 10/2029 None The Lindy Renaissance Charleston Hotel Aimbridge Hospitality At will with no fee 9/2025 None Salt Lake City Marriott Downtown at City Creek HEI Hotels & Resorts At will with no fee 9/2025 None Tranquility Bay Beachfront Resort EOS Hospitality At will with no fee 4/2032 Month-to-month Westin Boston Seaport District Aimbridge Hospitality At will with no fee 12/2026 None Westin Fort Lauderdale Beach Resort HEI Hotels & Resorts At will with no fee 12/2027 None Westin San Diego Bayview Aimbridge Hospitality At will with no fee N/A Month-to-month Westin Washington D.C.
(2) Hotel manager is entitled to one five-year extension option upon achievement of a certain level of net operating income, which is significantly above current net operating income at the hotel. -39- Table of Contents (3) Hotel manager is entitled to one five-year extension option if the manager earns an incentive management fee in both 2027 and 2028.
(2) Hotel manager is entitled to one five-year extension option upon achievement of a certain level of net operating income, which is significantly above current net operating income at the hotel. -37- Table of Contents (3) Hotel manager is entitled to one five-year extension option if the manager earns an incentive management fee in both 2027 and 2028.
We refer to this excess of operating profits over the owner's priority as “available cash flow.” The following table sets forth the base management fee and incentive management fee generally due and payable each fiscal year, for each of our hotels as of December 31, 2023: Property Base Management Fee (1) Incentive Management Fee (2) Atlanta Marriott Alpharetta 2% 15% (3) (4) Bourbon Orleans Hotel 1% (6) 15% (3) (4) Cavallo Point, The Lodge at the Golden Gate 2.5% 20% Chicago Marriott Downtown Magnificent Mile 3% 15% (7) Chico Hot Springs Resort & Day Spa 2.5% 15% (3) (8) Courtyard Denver Downtown 1.5% (5) 10% Courtyard New York Manhattan/Fifth Avenue 2.25% 15% (3) Courtyard New York Manhattan/Midtown East 1.75% 15% (3) Embassy Suites by Hilton Bethesda 1.5% (5) 10% The Gwen 2.25% (9) 15% Havana Cabana Key West 2.5% 15% (3) (8) Henderson Beach Resort 2.25% 15% (3) (4) Henderson Park Inn 2.5% 15% (3) (4) The Dagny Boston (formerly Hilton Boston Downtown/Faneuil Hall) 1.25% 15% (3) (4) Hilton Burlington Lake Champlain 1.5% (10) 10% (4) Hilton Garden Inn New York/Times Square Central 3% 20% (3) Hotel Clio 2% 15% (3) Hotel Emblem San Francisco 3% 10% (3) Hotel Palomar Phoenix 3.5% 20% The Hythe Vail 2% 15% (3) Kimpton Shorebreak Fort Lauderdale Beach Resort 2% 15% (3) Kimpton Shorebreak Huntington Beach Resort 2.5% 15% Lake Austin Spa Resort 2.5% 15% (3) (8) The Landing Lake Tahoe Resort & Spa 1.25% 15% (4) L'Auberge de Sedona 2.25% 15% (4) The Lodge at Sonoma Resort 2% 15% (3) Margaritaville Beach House Key West 3% 10% Orchards Inn Sedona 2.25% 15% (4) The Lindy Renaissance Charleston Hotel 2% 15% (3) (4) Salt Lake City Marriott Downtown at City Creek 2% 15% (3) Tranquility Bay Beachfront Resort 2.5% 15% (3) (8) Westin Boston Seaport District 1% (11) 15% (3) (4) Westin Fort Lauderdale Beach Resort 2% 15% (3) Westin San Diego Bayview 1.5% (10) 10% (4) Westin Washington D.C.
We refer to this excess of operating profits over the owner's priority as “available cash flow.” The following table sets forth the base management fee and incentive management fee generally due and payable each fiscal year, for each of our hotels as of December 31, 2024: Property Base Management Fee (1) Incentive Management Fee (2) AC Hotel Minneapolis Downtown 2.25% (3) 10% (3) Atlanta Marriott Alpharetta 2% 15% (4) (5) Bourbon Orleans Hotel 1% 15% (4) (5) Cavallo Point, The Lodge at the Golden Gate 2.5% 20% Chicago Marriott Downtown Magnificent Mile 3% 15% (7) Chico Hot Springs Resort & Day Spa 2.5% 15% (4) (8) Courtyard Denver Downtown 1.5% (6) 10% Courtyard New York Manhattan/Fifth Avenue 2.25% 15% (4) Courtyard New York Manhattan/Midtown East 1.75% 15% (4) Embassy Suites by Hilton Bethesda 1.5% (6) 10% The Gwen 2.25% (9) 15% Havana Cabana Key West 2.5% 15% (4) (8) Henderson Beach Resort 2.25% 15% (4) (5) Henderson Park Inn 2.5% 15% (4) (5) The Dagny Boston 1.25% 15% (4) (5) Hotel Champlain Burlington 1.5% (10) 10% (5) Hilton Garden Inn New York/Times Square Central 2.25% 20% (4) Hotel Clio 2% 15% (4) Hotel Emblem San Francisco 3% 10% (4) The Hythe Vail 2% 15% (4) Kimpton Hotel Palomar Phoenix 3.5% 20% Kimpton Shorebreak Fort Lauderdale Beach Resort 2% 15% (4) Kimpton Shorebreak Huntington Beach Resort 2.5% 15% Lake Austin Spa Resort 2.5% 15% (4) (8) The Landing Lake Tahoe Resort & Spa 1.25% 15% (5) L'Auberge de Sedona 2% (12) 15% (5) The Lodge at Sonoma Resort 2% 15% (4) Margaritaville Beach House Key West 3% 10% Orchards Inn Sedona 2% (12) 15% (5) The Lindy Renaissance Charleston Hotel 2% 15% (4) (5) Salt Lake City Marriott Downtown at City Creek 2% 15% (4) Tranquility Bay Beachfront Resort 2.5% 15% (4) (8) Westin Boston Seaport District 1% (11) 15% (4) (5) Westin Fort Lauderdale Beach Resort 2% 15% (4) Westin San Diego Bayview 1.5% (10) 10% (5) Westin Washington D.C.
The following table sets forth the expiration date of the current term, the terms of termination of the manager by the Company, and the number of remaining renewal terms at the manager's option under the respective hotel management agreements for each of our hotels as of December 31, 2023.
The following table sets forth the expiration date of the current term, the terms of termination of the manager by the Company, and the number of remaining renewal terms at the manager's option under the respective hotel management agreements for each of our hotels as of December 31, 2024.
Franchise Agreements The following table sets forth the terms of the hotel franchise agreements for our 19 franchised hotels as of December 31, 2023: Franchised Hotels Expiration Date of Agreement Franchise Fee Atlanta Marriott Alpharetta 9/2040 (1) 6% of gross room sales and 3% of gross food and beverage sales Embassy Suites by Hilton Bethesda 2/2037 3.5% of gross room sales; program fee of 4% of gross room sales (2) Courtyard Denver Downtown 10/2027 5.5% of gross room sales Courtyard New York Manhattan/Fifth Avenue 12/2035 6% of gross room sales Courtyard New York Manhattan/Midtown East 8/2042 6% of gross room sales The Gwen 9/2035 5% of gross room sales Hilton Burlington Lake Champlain 7/2032 (3) 5% of gross room sales and 3% of gross food and beverage sales; program fee of 4% of gross room sales (3) Hilton Garden Inn New York/Times Square Central 6/2033 5% of gross room sales; program fee of 4.3% of gross room sales Hotel Clio 10/2036 6% of gross room sales and 3% of gross food and beverage sales (4) The Hythe Vail 12/2041 5% of gross room sales and 2% of gross food and beverage sales Kimpton Shorebreak Fort Lauderdale Beach Resort 4/2041 6% of gross room sales and 2% of gross food and beverage sales The Lodge at Sonoma Resort 12/2035 5% of gross room sales Margaritaville Beach House Key West 4/2041 5% of gross revenues The Lindy Renaissance Charleston Hotel 12/2031 5% of gross room sales Salt Lake City Marriott Downtown at City Creek 9/2040 (1) 6% of gross room sales and 3% of gross food and beverage sales Westin Boston Seaport District 12/2026 6% of gross room sales and 2% of gross food and beverage sales (5) Westin Fort Lauderdale Beach Resort 12/2034 6% of gross room sales and 2% of gross food and beverage sales Westin San Diego Bayview 12/2040 7% of gross room sales and 3% of gross food and beverage sales Westin Washington D.C.
Franchise Agreements The following table sets forth the terms of the hotel franchise agreements for our 20 franchised hotels as of December 31, 2024: Franchised Hotels Expiration Date of Agreement Franchise Fee AC Hotel Minneapolis Downtown 10/2041 6% of gross room sales Atlanta Marriott Alpharetta 9/2040 (1) 6% of gross room sales and 3% of gross food and beverage sales Embassy Suites by Hilton Bethesda 2/2037 3.5% of gross room sales; program fee of 4% of gross room sales (2) Courtyard Denver Downtown 10/2027 5.5% of gross room sales Courtyard New York Manhattan/Fifth Avenue 12/2035 6% of gross room sales Courtyard New York Manhattan/Midtown East 8/2042 6% of gross room sales The Gwen 9/2035 5% of gross room sales Hotel Champlain Burlington 6/2034 4% of gross room sales; program fee of 4% of gross room sales (3) Hilton Garden Inn New York/Times Square Central 6/2033 5% of gross room sales; program fee of 4.3% of gross room sales Hotel Clio 10/2036 6% of gross room sales and 3% of gross food and beverage sales (4) The Hythe Vail 12/2041 5% of gross room sales and 2% of gross food and beverage sales Kimpton Shorebreak Fort Lauderdale Beach Resort 4/2041 6% of gross room sales and 2% of gross food and beverage sales The Lodge at Sonoma Resort 12/2035 5% of gross room sales Margaritaville Beach House Key West 4/2041 5% of gross revenues The Lindy Renaissance Charleston Hotel 12/2031 5% of gross room sales Salt Lake City Marriott Downtown at City Creek 9/2040 (1) 6% of gross room sales and 3% of gross food and beverage sales Westin Boston Seaport District 12/2026 6% of gross room sales and 2% of gross food and beverage sales (5) Westin Fort Lauderdale Beach Resort 12/2034 6% of gross room sales and 2% of gross food and beverage sales Westin San Diego Bayview 12/2040 7% of gross room sales and 3% of gross food and beverage sales Westin Washington D.C.
Properties The following table sets forth certain information for each of our hotels owned as of December 31, 2023. -37- Table of Contents Hotel City State Chain Scale Segment (1) Service Category Rooms Manager Chicago Marriott Downtown Magnificent Mile Chicago Illinois Upper Upscale Full Service 1,200 Marriott Westin Boston Seaport District Boston Massachusetts Upper Upscale Full Service 793 Aimbridge Hospitality Salt Lake City Marriott Downtown at City Creek Salt Lake City Utah Upper Upscale Full Service 510 HEI Hotels & Resorts Worthington Renaissance Fort Worth Hotel Fort Worth Texas Upper Upscale Full Service 504 Marriott Westin San Diego Bayview San Diego California Upper Upscale Full Service 436 Aimbridge Hospitality Westin Fort Lauderdale Beach Resort Fort Lauderdale Florida Upper Upscale Full Service 433 HEI Hotels & Resorts Westin Washington D.C.
Properties The following table sets forth certain information for each of our hotels owned as of December 31, 2024. -35- Table of Contents Hotel City State Chain Scale Segment (1) Service Category Rooms Manager Chicago Marriott Downtown Magnificent Mile Chicago Illinois Upper Upscale Full Service 1,200 Marriott Westin Boston Seaport District Boston Massachusetts Upper Upscale Full Service 793 Aimbridge Hospitality Salt Lake City Marriott Downtown at City Creek Salt Lake City Utah Upper Upscale Full Service 510 HEI Hotels & Resorts Worthington Renaissance Fort Worth Hotel Fort Worth Texas Upper Upscale Full Service 504 Marriott Westin San Diego Bayview San Diego California Upper Upscale Full Service 436 Aimbridge Hospitality Westin Fort Lauderdale Beach Resort Fort Lauderdale Florida Upper Upscale Full Service 432 HEI Hotels & Resorts Westin Washington D.C.
City Center 1.5% (5) 10% Worthington Renaissance Fort Worth Hotel 3% 25% ______________ (1) As a percentage of gross revenues. (2) As a percentage of hotel operating profits above a specified return on our invested capital or specified operating profit thresholds. (3) Total incentive management fees are capped at 1% of gross revenues.
City Center 1.5% (6) 10% Worthington Renaissance Fort Worth Hotel 3% 25% ______________ (1) As a percentage of gross revenues. (2) As a percentage of hotel operating profits above a specified return on our invested capital or specified operating profit thresholds. (3) Aggregate management fees (base plus incentive) are capped at 3.5% of total operating revenue.
(4) In January 2030, the franchise fees will decrease to 5% of gross room sales and 2% of gross food and beverage sales. (5) In January 2026, the franchise fees will increase to 7% of gross room sales and 3% of gross food and beverage sales through the remainder of the term.
(3) In July 2028, the franchise fees will increase to 5% through the remainder of the term. (4) In January 2030, the franchise fees will decrease to 5% of gross room sales and 2% of gross food and beverage sales.
City Center Washington District of Columbia Upper Upscale Full Service 410 Sage Hospitality The Dagny Boston (formerly Hilton Boston Downtown/Faneuil Hall) Boston Massachusetts Upper Upscale Full Service 403 Aimbridge Hospitality The Hythe Vail Vail Colorado Luxury Full Service 344 Vail Resorts Courtyard New York Manhattan/Midtown East New York New York Upscale Select Service 321 HEI Hotels & Resorts Atlanta Marriott Alpharetta Atlanta Georgia Upper Upscale Full Service 318 Aimbridge Hospitality The Gwen Chicago Illinois Luxury Full Service 311 HEI Hotels & Resorts Hilton Garden Inn New York/Times Square Central New York New York Upscale Select Service 282 Highgate Hotels Embassy Suites by Hilton Bethesda Bethesda Maryland Upper Upscale Full Service 272 Sage Hospitality Hilton Burlington Lake Champlain Burlington Vermont Upper Upscale Full Service 258 Aimbridge Hospitality Henderson Beach Resort Destin Florida Luxury Full Service 255 Aimbridge Hospitality Kimpton Hotel Palomar Phoenix Phoenix Arizona Upper Upscale Full Service 242 Kimpton Hotels & Restaurants Bourbon Orleans Hotel New Orleans Louisiana Luxury Full Service 220 Evolution Hospitality Hotel Clio Denver Colorado Luxury Full Service 199 Sage Hospitality Courtyard New York Manhattan/Fifth Avenue New York New York Upscale Select Service 189 Highgate Hotels Margaritaville Beach House Key West Key West Florida Upper Upscale Full Service 186 Ocean Properties The Lodge at Sonoma Resort Sonoma California Upper Upscale Full Service 182 Sage Hospitality Courtyard Denver Downtown Denver Colorado Upscale Select Service 177 Sage Hospitality The Lindy Renaissance Charleston Hotel Charleston South Carolina Upper Upscale Full Service 167 Aimbridge Hospitality Kimpton Shorebreak Huntington Beach Resort Huntington Beach California Upper Upscale Full Service 157 Kimpton Hotels & Restaurants Cavallo Point, The Lodge at the Golden Gate Sausalito California Luxury Full Service 142 Passport Resorts Chico Hot Springs Resort & Day Spa Pray Montana Economy Full Service 117 EOS Hospitality Havana Cabana Key West Key West Florida Upscale Full Service 106 EOS Hospitality Tranquility Bay Beachfront Resort Marathon Florida Luxury Full Service 103 EOS Hospitality Hotel Emblem San Francisco San Francisco California Upper Upscale Full Service 96 Pacifica Hotels Kimpton Shorebreak Fort Lauderdale Beach Resort Fort Lauderdale Florida Upper Upscale Full Service 96 HEI Hotels & Resorts L'Auberge de Sedona Sedona Arizona Luxury Full Service 88 Evolution Hospitality The Landing Lake Tahoe Resort & Spa South Lake Tahoe California Luxury Full Service 82 Evolution Hospitality Orchards Inn Sedona Sedona Arizona Upscale Full Service 70 Evolution Hospitality Lake Austin Spa Resort Austin Texas Luxury Full Service 40 EOS Hospitality Henderson Park Inn Destin Florida Luxury Full Service 37 Aimbridge Hospitality Total 9,746 _____________ (1) As defined by STR, Inc. -38- Table of Contents Hotel Management Agreements We are party to hotel management agreements for each hotel we own.
City Center (2) Washington District of Columbia Upper Upscale Full Service 410 Sage Hospitality The Dagny Boston Boston Massachusetts Upper Upscale Full Service 403 Aimbridge Hospitality The Hythe Vail Vail Colorado Luxury Full Service 344 Vail Resorts Courtyard New York Manhattan/Midtown East New York New York Upscale Select Service 321 HEI Hotels & Resorts Atlanta Marriott Alpharetta Atlanta Georgia Upper Upscale Full Service 318 Aimbridge Hospitality The Gwen Chicago Illinois Luxury Full Service 311 HEI Hotels & Resorts Hilton Garden Inn New York/Times Square Central New York New York Upscale Select Service 282 Highgate Hotels Embassy Suites by Hilton Bethesda Bethesda Maryland Upper Upscale Full Service 272 Sage Hospitality Hotel Champlain Burlington Burlington Vermont Upper Upscale Full Service 258 Aimbridge Hospitality Henderson Beach Resort Destin Florida Luxury Full Service 269 Aimbridge Hospitality AC Hotel Minneapolis Downtown (3) Minneapolis Minnesota Upscale Select Service 245 Sage Hospitality Kimpton Hotel Palomar Phoenix Phoenix Arizona Upper Upscale Full Service 242 Kimpton Hotels & Restaurants Bourbon Orleans Hotel New Orleans Louisiana Luxury Full Service 220 Evolution Hospitality Hotel Clio Denver Colorado Luxury Full Service 199 Sage Hospitality Courtyard New York Manhattan/Fifth Avenue New York New York Upscale Select Service 189 Highgate Hotels Margaritaville Beach House Key West Key West Florida Upper Upscale Full Service 186 Ocean Properties The Lodge at Sonoma Resort Sonoma California Upper Upscale Full Service 182 Sage Hospitality Courtyard Denver Downtown Denver Colorado Upscale Select Service 177 Sage Hospitality The Lindy Renaissance Charleston Hotel Charleston South Carolina Upper Upscale Full Service 167 Aimbridge Hospitality Kimpton Shorebreak Huntington Beach Resort Huntington Beach California Upper Upscale Full Service 157 Kimpton Hotels & Restaurants Cavallo Point, The Lodge at the Golden Gate Sausalito California Luxury Full Service 142 Passport Resorts Chico Hot Springs Resort & Day Spa Pray Montana Economy Full Service 117 EOS Hospitality Havana Cabana Key West Key West Florida Upscale Full Service 106 EOS Hospitality Tranquility Bay Beachfront Resort Marathon Florida Luxury Full Service 103 EOS Hospitality Hotel Emblem San Francisco San Francisco California Upper Upscale Full Service 96 Pacifica Hotels Kimpton Shorebreak Fort Lauderdale Beach Resort Fort Lauderdale Florida Upper Upscale Full Service 96 HEI Hotels & Resorts L'Auberge de Sedona Sedona Arizona Luxury Full Service 88 Evolution Hospitality The Landing Lake Tahoe Resort & Spa South Lake Tahoe California Luxury Full Service 82 Evolution Hospitality Orchards Inn Sedona Sedona Arizona Upscale Full Service 70 Evolution Hospitality Lake Austin Spa Resort Austin Texas Luxury Full Service 40 EOS Hospitality Henderson Park Inn Destin Florida Luxury Full Service 37 Aimbridge Hospitality Total 10,004 _____________ (1) As defined by STR, Inc. -36- Table of Contents (2) On February 19, 2025, we sold the Westin Washington D.C.
Base management fees for the year ended December 31, 2023 were decreased to 0.5% of gross revenues. Additional information regarding fees incurred under hotel management agreements can be found in Note 13 to our accompanying consolidated financial statements.
Base management fees for the year ended December 31, 2024 were 0.5% of gross revenues. (12) The base management fee decreased from 2.25% of gross revenues to 2% of gross revenues beginning September 1, 2024. Additional information regarding fees incurred under hotel management agreements can be found in Note 13 to our accompanying consolidated financial statements.
The incentive management fee is generally based on hotel operating profits, but the fee only applies to that portion of hotel operating profits above a negotiated return on our invested capital, which we refer to as the owner's priority.
The base management fee is generally payable as a percentage of gross hotel revenues for each fiscal year. The incentive management fee is generally based on hotel operating profits, but the fee only applies to that portion of hotel operating profits above a negotiated return on our invested capital, which we refer to as the owner's priority.
(4) The property will not individually earn their incentive fee unless a collective owner's priority threshold is met. (5) The base management fee is the sum of 1.5% of gross revenues and 1.5% gross operating profit.
(4) Total incentive management fees are capped at 1% of gross revenues. -38- Table of Contents (5) The property will not individually earn their incentive fee unless a collective owner's priority threshold is met. (6) The base management fee is the sum of 1.5% of gross revenues and 1.5% gross operating profit.
Ground Leases Eight of our hotels and one parking area are subject to ground lease agreements. Additional information regarding our hotels that are subject to ground leases can be found in Note 8 to our accompanying consolidated financial statements. -42- Table of Contents
Additional information regarding our hotels that are subject to ground leases can be found in Note 8 to our accompanying consolidated financial statements. -40- Table of Contents
(9) The incentive management fee is capped at 0.75% of gross revenues. (10) Total management fees are capped at 2.5% of gross revenues. (11) The base management fee decreases to 0.5% of gross revenues if the annual gross operating profit is less than $36 million.
(10) Total management fees are capped at 2.5% of gross revenues. (11) The base management fee decreases to 0.5% of gross revenues if the annual gross operating profit is less than $36 million. Effective January 1, 2025, the GOP threshold increases annually by the percentage increase in CPI.
Additional information regarding fees incurred under franchise agreements can be found in Note 13 to our accompanying consolidated financial statements. Mortgage Debt -41- Table of Contents Four of our hotels are encumbered by mortgage debt. Additional information regarding such hotels can be found in Note 5 to our accompanying consolidated financial statements.
Mortgage Debt -39- Table of Contents As of December 31, 2024, three of our hotels are encumbered by mortgage debt. Additional information regarding such hotels can be found in Note 5 to our accompanying consolidated financial statements. Ground Leases Eight of our hotels and one parking area are subject to ground lease agreements.
The manager did not earn an incentive management fee in 2023. Under our hotel management agreements, the hotel manager receives a base management fee and, if certain financial thresholds are met or exceeded, an incentive management fee. The base management fee is generally payable as a percentage of gross hotel revenues for each fiscal year.
The manager did not earn an incentive management fee in 2024. (4) On January 30, 2025, the term of the hotel operating agreement was extended to April 30, 2025. Under our hotel management agreements, the hotel manager receives a base management fee and, if certain financial thresholds are met or exceeded, an incentive management fee.
There is no owner's priority; however, the Company's contribution to the hotel's recent multi-year property renovation is treated as a deduction in calculating net operating income. (8) The incentive management fee increases to 1.5% of gross revenues if the gross operating profit exceeds a specified amount plus any owner's priority.
Total management fees are capped at 3% of gross revenues. (7) Calculated as 15% of net operating income. (8) The incentive management fee increases to 1.5% of gross revenues if the gross operating profit exceeds a specified amount plus any owner's priority. (9) The incentive management fee is capped at 0.75% of gross revenues.
Removed
Total management fees are capped at 3% of gross revenues. -40- Table of Contents (6) The base management fee was 2% from January 2023 through August 2023 and decreased to 1% for the remainder of the year. (7) Calculated as 15% of net operating income.
Added
City Center. (3) On November 12, 2024, we acquired the AC Hotel Minneapolis Downtown. Hotel Management Agreements We are party to hotel management agreements for each hotel we own.
Removed
(3) On August 22, 2022, we entered into a franchise agreement to convert the brand to a Curio Collection Hotel. The new franchise agreement has a term of ten years, and the brand conversion will be effective upon the completion of an agreed-upon renovation.
Added
(5) In January 2026, the franchise fees will increase to 7% of gross room sales and 3% of gross food and beverage sales through the remainder of the term. Additional information regarding fees incurred under franchise agreements can be found in Note 13 to our accompanying consolidated financial statements.
Removed
The franchise fees will be 4% of gross rooms sales for the first four years and then increase to 5% through the remainder of the term. There will also be a program fee of 4% of gross rooms sales.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed2 unchanged
Biggest changeThe outcome of claims, lawsuits and legal proceedings brought against the Company, however, is subject to significant uncertainties. Item 4. Mine Safety Disclosures Not applicable. -43- Table of Contents Part II
Biggest changeThe outcome of claims, lawsuits and legal proceedings brought against the Company, however, is subject to significant uncertainties. Item 4. Mine Safety Disclosures Not applicable. -41- Table of Contents Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

10 edited+1 added−0 removed5 unchanged
Biggest change(2) Performance stock units and deferred stock units do not have any exercise price. -45- Table of Contents Fourth Quarter 2023 Repurchases of Equity Securities Period (a) Total Number of Shares Purchased (b) Average Price Paid per Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (in thousands) (1) October 1 - October 31, 2023 — $ — — $ 185,324 November 1 - November 30, 2023 — $ — — $ 185,324 December 1 - December 31, 2023 — $ — — $ 185,324 ______________ (1) Represents amounts available under the Company's $200.0 million share repurchase program approved by the board of directors on September 29, 2022 (the “Share Repurchase Program”).
Biggest change(2) Performance stock units and deferred stock units do not have any exercise price. -43- Table of Contents Fourth Quarter 2024 Repurchases of Equity Securities Period (a) Total Number of Shares Purchased (b) Average Price Paid per Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (in thousands) (1) October 1 - October 31, 2024 — $ — — $ 174,038 November 1 - November 30, 2024 — $ — — $ 174,038 December 1 - December 31, 2024 — $ — — $ 174,038 ______________ (1) On May 1, 2024, our board of directors approved a $200.0 million share repurchase program.
Dividend Information -44- Table of Contents In order to maintain our qualification as a REIT, we must make distributions to our stockholders each year in an amount equal to at least: • 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding net capital gains, plus • 90% of the excess of our net income from foreclosure property over the tax imposed on such income by the Code, minus • any excess non-cash income.
Dividend Information -42- Table of Contents In order to maintain our qualification as a REIT, we must make distributions to our stockholders each year in an amount equal to at least: • 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding net capital gains, plus • 90% of the excess of our net income from foreclosure property over the tax imposed on such income by the Code, minus • any excess non-cash income.
Equity Compensation Plan Information The following table provides information as of December 31, 2023 regarding shares of common stock that may be issued under the Company’s equity compensation plans.
Equity Compensation Plan Information The following table provides information as of December 31, 2024 regarding shares of common stock that may be issued under the Company’s equity compensation plans.
The graph assumes an initial investment on December 31, 2018 of $100 in our common stock in each of the indices and also assumes the reinvestment of dividends.
The graph assumes an initial investment on December 31, 2019 of $100 in our common stock in each of the indices and also assumes the reinvestment of dividends.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades on the NYSE under the symbol “DRH”. The closing price of our common stock on the NYSE on December 29, 2023 was $9.39 per share.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades on the NYSE under the symbol “DRH”. The closing price of our common stock on the NYSE on December 31, 2024 was $9.03 per share.
The Share Repurchase Program does not obligate the Company to acquire any particular amount of shares, and may be suspended or discontinued at any time at the Company’s discretion. The Share Repurchase Program expires on February 28, 2025. Fourth Quarter 2023 Sales of Unregistered Securities None. Item 6. Reserved Not applicable.
The share repurchase program expires on May 1, 2026. The share repurchase program does not obligate the Company to acquire any particular amount of shares, and the share repurchase program may be suspended or discontinued at any time at the Company's discretion. Fourth Quarter 2024 Sales of Unregistered Securities None. Item 6. Reserved Not applicable.
Stockholder Information As of February 23, 2024, there were 13 record holders of our common stock and we believe we have more than one thousand beneficial holders. As of February 23, 2024, there were 11 holders of common OP units (in addition to the Company and executive officers of the Company).
Stockholder Information As of February 25, 2025, there were 13 record holders of our common stock and we believe we have more than one thousand beneficial holders. As of February 25, 2025, there were 14 holders of common OP units (in addition to the Company and executive officers of the Company).
Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (a) (b) (c) Equity compensation plans approved by security holders 2,903,835 (1) — (2) — Equity compensation plans not approved by security holders — — — Total 2,903,835 — — ______________ (1) Includes 1,871,539 shares of common stock issuable pursuant to our deferred compensation plan and 1,032,296 shares of common stock issuable upon the achievement of certain performance conditions.
Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (a) (b) (c) Equity compensation plans approved by security holders 2,443,560 (1) — (2) 6,823,085 Equity compensation plans not approved by security holders — — — Total 2,443,560 — 6,823,085 ______________ (1) Includes 1,334,986 shares of common stock issuable pursuant to our deferred compensation plan and 1,108,574 shares of common stock issuable upon the achievement of certain performance conditions.
Hotel Hotels Total Return $100.00 $109.70 $73.24 $87.06 $81.38 $99.96 This performance graph shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing by us under the Securities Act of 1933, as amended (the “Securities Act”), except as shall be expressly set forth by specific reference in such filing.
Hotel Hotels Total Return $100.00 $66.77 $79.36 $74.18 $91.12 $81.99 This performance graph shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing by us under the Securities Act of 1933, as amended (the “Securities Act”), except as shall be expressly set forth by specific reference in such filing.
The total return values do not include dividends declared, but not paid, during the period. 2018 2019 2020 2021 2022 2023 DiamondRock Hospitality Company Total Return $100.00 $129.66 $96.55 $112.46 $96.94 $112.76 S&P 500 Total Return $100.00 $131.49 $155.68 $200.37 $164.08 $207.21 Dow Jones U.S.
The total return values do not include dividends declared, but not paid, during the period. 2019 2020 2021 2022 2023 2024 DiamondRock Hospitality Company Total Return $100.00 $74.46 $86.73 $74.76 $86.96 $86.63 S&P 500 Total Return $100.00 $118.40 $152.39 $124.79 $157.59 $197.02 Dow Jones U.S.
Added
Does not include 621,595 shares of unvested restricted stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

73 edited+27 added−31 removed56 unchanged
Biggest changeCapital Expenditures The management and franchise agreements for each of our hotels provide for the establishment of separate property improvement reserves to cover, among other things, the cost of replacing and repairing furniture, fixtures and equipment at our hotels and other routine capital expenditures. Contributions to the property improvement fund are calculated as a percentage of hotel revenues.
Biggest changeWe have declared the following dividends to holders of our common stock and distributions to holders of common OP units and LTIP units for the years ended December 31, 2024 and 2023, and through the date of this report: Payment Date Record Date Dividend per Share/Unit April 12, 2023 March 31, 2023 $ 0.03 July 12, 2023 June 30, 2023 $ 0.03 October 12, 2023 September 29, 2023 $ 0.03 January 11, 2024 December 29, 2023 $ 0.03 April 12, 2024 March 29, 2024 $ 0.03 July 12, 2024 June 28, 2024 $ 0.03 October 11, 2024 September 30, 2024 $ 0.03 January 14, 2025 December 31, 2024 $ 0.23 We have declared the following dividends to holders of our Series A Preferred Stock for the years ended December 31, 2024 and 2023, and through the date of this report: Payment Date Record Date Dividend per Share March 31, 2023 March 17, 2023 $ 0.515625 June 30, 2023 June 20, 2023 $ 0.515625 September 29, 2023 September 18, 2023 $ 0.515625 December 29, 2023 December 18, 2023 $ 0.515625 March 29, 2024 March 18, 2024 $ 0.515625 June 28, 2024 June 18, 2024 $ 0.515625 September 30, 2024 September 20, 2024 $ 0.515625 December 31, 2024 December 20, 2024 $ 0.515625 Capital Expenditures The management and franchise agreements for each of our hotels provide for the establishment of separate property improvement reserves to cover, among other things, the cost of replacing and repairing furniture, fixtures and equipment at our hotels and other routine capital expenditures.
Our ability to raise capital through the issuance of additional equity and/or debt securities is also dependent on a number of factors including the current state of the capital markets, investor sentiment and intended use of proceeds.
Our ability to raise capital through the issuance of additional equity and/or debt securities is also dependent on a number of factors including the current state of the capital markets, investor sentiment and our intended use of proceeds.
We exclude the effect of these adjustments, which include the accounting impact from prior periods, because they do not reflect the Company’s actual underlying performance for the current period. • Gains or Losses from Early Extinguishment of Debt : We exclude the effect of gains or losses recorded on the early extinguishment of debt because these gains or losses result from transaction activity related to the Company’s capital structure that we believe are not indicative of the ongoing operating performance of the Company or our hotels. • Hotel Acquisition Costs : We exclude hotel acquisition costs expensed during the period because we believe these transaction costs are not reflective of the ongoing performance of the Company or our hotels. • Severance Costs : We exclude corporate severance costs, or reversals thereof, incurred with the termination of corporate-level employees and severance costs incurred at our hotels related to lease terminations or structured severance programs because we believe these costs do not reflect the ongoing performance of the Company or our hotels. • Hotel Manager Transition Items : We exclude the transition items associated with a change in hotel manager because we believe these items do not reflect the ongoing performance of the Company or our hotels. -56- Table of Contents • Hotel Pre-Opening Costs: We exclude the pre-opening costs associated with the redevelopment or rebranding of a hotel because we believe these items do not reflect the ongoing performance of the Company or our hotels. • Other Items : From time to time we incur costs or realize gains that we consider outside the ordinary course of business and that we do not believe reflect the ongoing performance of the Company or our hotels.
We exclude the effect of these adjustments, which include the accounting impact from prior periods, because they do not reflect the Company’s actual underlying performance for the current period. • Gains or Losses from Early Extinguishment of Debt : We exclude the effect of gains or losses recorded on the early extinguishment of debt because these gains or losses result from transaction activity related to the Company’s capital structure that we believe are not indicative of the ongoing operating performance of the Company or our hotels. • Hotel Acquisition Costs : We exclude hotel acquisition costs expensed during the period because we believe these transaction costs are not reflective of the ongoing performance of the Company or our hotels. • Severance Costs : We exclude corporate severance costs, or reversals thereof, incurred with the termination of corporate-level employees and severance costs incurred at our hotels related to lease terminations or structured -54- Table of Contents severance programs because we believe these costs do not reflect the ongoing performance of the Company or our hotels. • Hotel Manager Transition and Hotel Pre-Opening Costs : We exclude the transition costs associated with a change in hotel manager and the pre-opening costs associated with the redevelopment or rebranding of a hotel because we believe these items do not reflect the ongoing performance of the Company or our hotels. • Other Items : From time to time we incur costs or realize gains that we consider outside the ordinary course of business and that we do not believe reflect the ongoing performance of the Company or our hotels.
For the year ended December 31, 2023, we recognized $0.5 million of business interruption insurance income related to an electrical fire at the Hilton Garden Inn New York/Times Square Central that caused the hotel to be closed for seven days and $0.1 million related to an insurance claim at the Worthington Renaissance Fort Worth Hotel.
During the year ended December 31, 2023, we recognized $0.5 million of business interruption insurance income related to an electrical fire at the Hilton Garden Inn New York/Times Square Central that caused the hotel to be closed for seven days and $0.1 million related to an insurance claim at the Worthington Renaissance Fort Worth Hotel.
Depreciation is recorded using the straight-line method over the assets' estimated useful lives, which are generally as follows: 5 to 40 years for buildings and improvements; 1 to 10 years for furniture, fixtures and equipment; and 3 to 5 years for computer equipment and acquired software. We evaluate the carrying value of our property and equipment for indicators of impairment.
Depreciation is recorded using the straight-line method over the assets' estimated useful lives, which are generally as follows: 15 to 40 years for buildings and improvements; 1 to 10 years for furniture, fixtures and equipment; and 3 to 5 years for computer equipment and acquired software. We evaluate the carrying value of our property and equipment for indicators of impairment.
In addition, our ADR, occupancy percentage and RevPAR performance is dependent on the continued success of our hotels' global brands. We also use EBITDA, EBITDA re , Adjusted EBITDA, Hotel Adjusted EBTIDA, FFO and Adjusted FFO as measures of the financial performance of our business. See “Non-GAAP Financial Measures” for further discussion on these financial measures.
In addition, our ADR, occupancy percentage and RevPAR performance is dependent on the continued success of our hotels' global brands. We also use EBITDA, EBITDA re , Adjusted EBITDA, Hotel Adjusted EBITDA, FFO and Adjusted FFO as measures of the financial performance of our business. See “Non-GAAP Financial Measures” for further discussion on these financial measures.
The revolving credit facility matures on September 27, 2026, which we may extend for an additional year upon the payment of applicable fees and satisfaction of certain standard conditions. The term loan facilities consist of a $500 million term loan that matures on January 3, 2028 and a $300 million term loan that matures on January 3, 2025.
The revolving credit facility matures on September 27, 2026, which we may extend for an additional year upon the payment of applicable fees and satisfaction of certain standard conditions. The term loan facilities consist of a $500 million term loan that matures on January 3, 2028 and a $300 million term loan that matures on January 3, 2026.
Hotel Adjusted EBITDA We believe that Hotel Adjusted EBITDA provides our investors a useful financial measure to evaluate our hotel operating performance, excluding the impact of our capital structure (primarily interest), our asset base (primarily depreciation and amortization), and our corporate-level expenses.
Hotel Adjusted EBITDA We believe that Hotel Adjusted EBITDA provides our investors with a useful financial measure to evaluate our hotel operating performance, excluding the impact of our capital structure (primarily interest), our asset base (primarily depreciation and amortization), and our corporate-level expenses.
Increases in interest rates, especially if coupled with reduced government spending and volatility in financial markets, may have the effect of further increasing economic uncertainty, and increasing the cost of new indebtedness and servicing our outstanding variable rate debt.
Any increases in interest rates, especially if coupled with reduced government spending and volatility in financial markets, may have the effect of further increasing economic uncertainty, and increasing the cost of new indebtedness and servicing our outstanding variable rate debt.
The remaining increase in hotel operating expenses was primarily due to increased occupancy and related labor costs. Other property-level expenses increased due to higher property tax assessments and insurance premiums. Depreciation and amortization. Depreciation and amortization on our hotel buildings is generally recorded over a 40 year period subsequent to an acquisition.
The remaining increase in hotel operating expenses was primarily due to higher occupancy levels and increased labor costs. Other property level expenses increased due to higher property tax assessments and insurance premiums. Depreciation and amortization. Depreciation and amortization on our hotel buildings is generally recorded over a 40 year period subsequent to an acquisition.
Our long-term liquidity requirements consist primarily of funds necessary to pay for the costs of acquiring additional hotels, renovations and other capital expenditures that need to be made periodically to our hotels, scheduled debt payments, debt maturities, certain redemptions of limited operating partnership units (“common OP units”), ground lease payments, share repurchases, and making distributions to our common and preferred stockholders.
Our long-term liquidity requirements consist primarily of funds necessary to pay for the costs of acquiring additional hotels, renovations and other capital expenditures that need to be made periodically to our hotels, scheduled debt payments, debt maturities, certain redemptions of limited operating partnership units (“common OP units”), ground lease payments, share -49- Table of Contents repurchases, and making distributions to our common and preferred stockholders.
In making estimates of fair values for purposes of allocating purchase price we evaluate several factors, including but not limited to comparable sales, expected future cash flows discounted at risk adjusted rates as well as industry and Company data. Direct acquisition-related costs are capitalized as a component of the acquired assets.
In making estimates of fair values for purposes of allocating purchase price we evaluate several factors, including but not limited to -56- Table of Contents comparable sales, expected future cash flows discounted at risk adjusted rates as well as industry and Company data. Direct acquisition-related costs are capitalized as a component of the acquired assets.
Dividend Policy We intend to distribute to our stockholders dividends at least equal to our REIT taxable income to avoid paying corporate income tax and excise tax on our earnings (other than the earnings of our taxable REIT subsidiaries, which are all subject to tax at regular corporate rates) and to qualify for the tax benefits afforded to REITs under the Code.
Dividend Policy -51- Table of Contents We intend to distribute to our stockholders dividends at least equal to our REIT taxable income to avoid paying corporate income tax and excise tax on our earnings (other than the earnings of our taxable REIT subsidiaries, which are all subject to tax at regular corporate rates) and to qualify for the tax benefits afforded to REITs under the Code.
The project will integrate the hotel with the adjacent L'Auberge de Sedona and include construction of a new pool connecting the two properties, renovation of the guestrooms and creation of a new arrival experience and new outdoor event space.
The repositioning will integrate the hotel with the adjacent L'Auberge de Sedona and include construction of a new pool connecting the two properties, renovation of the guestrooms and creation of a new arrival experience and new outdoor event space.
We believe that it is prudent to reduce the inherent risk of highly cyclical lodging fundamentals through a low leverage capital structure. We prefer a relatively simple but efficient capital structure.
We believe that it is prudent to reduce the inherent risk of highly cyclical lodging fundamentals through a low leverage capital structure. We prefer a relatively simple yet efficient capital structure.
The Company computes EBITDA re in accordance with the National Association of Real Estate Investment Trusts ("Nareit") guidelines, as -55- Table of Contents defined in its September 2017 white paper "Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate." EBITDA re represents net income (calculated in accordance with U.S.
The Company computes EBITDA re in accordance with the National Association of Real Estate Investment Trusts ("Nareit") guidelines, as defined in its September 2017 white paper "Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate." EBITDA re represents net income (calculated in accordance with U.S.
Such provisions do not allow the lender the right to accelerate repayment of the underlying debt. As of December 31, 2023, we had no cash traps in place.
Such provisions do not allow the lender the right to accelerate repayment of the underlying debt. As of December 31, 2024, we had no cash traps in place.
Based on when a property was acquired, operating results for certain properties are not comparable for the year ended December 31, 2023 and 2022.
Based on when a property was acquired, operating results for certain properties are not comparable for the year ended December 31, 2024 and 2023.
As an owner, we receive all of the operating profits or losses generated by our hotels after we pay fees to the hotel managers and hotel brands, which are based on the revenues and profitability of the hotels. We are a real estate investment trust ("REIT") for United States ("U.S.") federal income tax purposes.
As an owner, we receive all of the operating profits or losses generated by our hotels after we pay fees to the hotel managers and hotel brands, which are based on the revenues and profitability of the hotels. We are a real estate investment trust (“REIT”) for U.S. federal income tax purposes.
New Accounting Pronouncements Not Yet Implemented See Note 2 to the accompanying consolidated financial statements for additional information relating to recently issued accounting pronouncements.
New Accounting Pronouncements Not Yet Adopted See Note 2 to the accompanying consolidated financial statements for additional information relating to recently issued accounting pronouncements.
See Note 9 for additional disclosures related to common OP units. Key Indicators of Financial Condition and Operating Performance We use a variety of operating and other information to evaluate the financial condition and operating performance of our business. These key indicators include financial information that is prepared in accordance with U.S.
See Note 9 for additional disclosures related to common OP units. Key Indicators of Financial Condition and Operating Performance We use a variety of operating and other information to evaluate the financial condition and operating performance of our business. These key indicators include financial information that is prepared in accordance with U.S. Generally Accepted Accounting Principles (“U.S.
We believe that we maintain a reasonable amount of debt. As of December 31, 2023, we had $1.2 billion of debt outstanding with a weighted average interest rate of 5.22% and a weighted average maturity date of approximately 2.7 years, assuming all extension options available in our debt agreements are exercised.
We believe that we maintain a reasonable amount of debt. As of December 31, 2024, we had $1.1 billion of debt outstanding with a weighted average interest rate of 5.21% and a weighted average maturity date of approximately 1.7 years, assuming all extension options available in our debt agreements are exercised.
Room revenue comprised approximately 67% of our total revenues for the year ended December 31, 2023 and is dictated by demand, as measured by occupancy percentage, pricing, as measured by ADR, and our available supply of hotel rooms.
Room revenue comprised approximately 66% of our total revenues for the year ended December 31, 2024 and is dictated by demand, as measured by occupancy percentage, pricing, as measured by ADR, and our available supply of hotel rooms.
Results of Operations At December 31, 2023 and 2022, we owned 36 and 35 hotels, respectively. All properties owned during these periods have been included in our results of operations during the respective periods since their date of acquisition.
Results of Operations At December 31, 2024 and 2023, we owned 37 and 36 hotels, respectively. All properties owned during these periods have been included in our results of operations during the respective periods since their date of acquisition.
The Company is the sole general partner of our operating partnership and owns 99.7% of the limited partnership units (“common OP units”) of our operating partnership as of December 31, 2023. The remaining 0.3% of the common OP units are held by third parties and executive officers of the Company.
The Company is the sole general partner of our operating partnership and owns 99.5% of the limited partnership units (“common OP units”) of our operating partnership as of December 31, 2024. The remaining 0.5% of the common OP units are held by third parties and current and former executive officers of the Company.
Comparison of the Year Ended December 31, 2022 to the Year Ended December 31, 2021 Discussion of the comparison of the results of operations for the year ended December 31, 2022 to the year ended December 31, 2021 was included in our Annual Report on Form 10-K for the year ended December 31, 2022 on page 49 under -51- Table of Contents Part II, Item 7 "Management’s Discussion and Analysis of Financial Condition and Results of Operations," which was filed with the SEC on February 24, 2023.
Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022 Discussion of the comparison of the results of operations for the year ended December 31, 2023 to the year ended December 31, 2022 was included in our Annual Report on Form 10-K for the year ended December 31, 2023 on page 49 under Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which was filed with the SEC on February 28, 2024.
Our cash from operations generally consists of the net cash flow from hotel operations, offset by cash paid for corporate expenses, interest payments, and -53- Table of Contents other working capital changes. The increase in cash provided by operations was primarily driven by timing differences related to collections from our hotel managers.
Our cash from operations generally consists of the net cash flow from hotel operations, offset by cash paid for corporate expenses, interest payments, and other working capital changes. The decrease in cash provided by operations was primarily driven by timing differences related to collections from our hotel managers and severance payments related to our previously announced leadership changes.
As of December 31, 2023, we have set aside $39.7 million for capital projects in property improvement funds, which are included in restricted cash on our consolidated balance sheets. -54- Table of Contents We invested approximately $86.3 million in capital improvements at our hotels during the year ended December 31, 2023.
As of -52- Table of Contents December 31, 2024, we have set aside $44.7 million for capital projects in property improvement funds, which are included in restricted cash on our consolidated balance sheets. We invested approximately $81.6 million in capital improvements at our hotels during the year ended December 31, 2024.
Our net cash used in financing activities was $56.7 million for the year ended December 31, 2023, which consisted of $31.9 million of distributions paid to holders of common stock and common units, $9.8 million of distributions paid to holders of preferred stock, $9.5 million of scheduled mortgage debt principal payments, $3.0 million paid to repurchase shares upon the vesting of restricted stock for the payment of tax withholdings obligations, and $2.4 million paid to repurchase shares under our share repurchase program.
Our net cash used in financing activities was $150.7 million for the year ended December 31, 2024, which consisted of $25.6 million of distributions paid to holders of common stock and common units, $9.8 million of distributions paid to holders of preferred stock, $9.1 million of scheduled mortgage debt principal payments, $73.3 million of repayments of mortgage debt, $6.9 million paid to repurchase shares upon the vesting of restricted stock for the payment of tax withholdings obligations, and $26.0 million paid to repurchase shares under our share repurchase program.
In addition, we may be required to pay for the cost of certain additional improvements that are not permitted to be funded from the property improvement reserves under the applicable management or franchise agreement.
Contributions to the property improvement fund are calculated as a percentage of hotel revenues. In addition, we may be required to pay for the cost of certain additional improvements that are not permitted to be funded from the property improvement reserves under the applicable management or franchise agreement.
In addition, to derive Adjusted FFO we exclude any unrealized fair value adjustments to interest rate swaps. We exclude these non-cash amounts because they do not reflect the underlying performance of the Company.
In addition, to derive Adjusted FFO, we exclude any unrealized fair value adjustments to interest rate swaps and the portion of our non-cash ground lease expense recognized as interest expense. We exclude these non-cash amounts because they do not reflect the underlying performance of the Company.
We expect our estimated uses of cash for the year ending December 31, 2024 will be scheduled debt service and maturity payments, capital expenditures, distributions to preferred and common stockholders, corporate expenses and potential share repurchases.
We expect our estimated uses of cash for the year ending December 31, 2025 will be scheduled debt service and maturity payments, potential acquisitions of hotel properties, capital expenditures, operating costs, ground lease payments, corporate expenses, distributions to preferred and common stockholders, and potential share repurchases.
GAAP net income to FFO and Adjusted FFO (in thousands): Year Ended December 31, 2023 2022 2021 Net income (loss) $ 86,635 $ 109,705 $ (195,405) Real estate related depreciation and amortization 111,302 108,849 102,963 Impairment losses 941 2,843 127,282 Loss on sale of hotel properties (1) — 1,659 — FFO 198,878 223,056 34,840 Distributions to preferred stockholders (9,817) (9,817) (9,817) FFO available to common stock and unit holders 189,061 213,239 25,023 Non-cash lease expense and other amortization 6,156 6,226 6,673 Professional fees and pre-opening costs related to Frenchman's Reef (2) — — 1,388 Uninsured costs related to natural disasters (3) — — 298 Loss on early extinguishment of debt — 9,766 — Hotel pre-opening costs 1,246 — — Hotel manager transition items — 1,164 651 Severance costs (4) — (532) (37) Fair value adjustments to interest rate swaps 2,033 (13,914) (7,690) Adjusted FFO available to common stock and unit holders $ 198,496 $ 215,949 $ 26,306 _______________ (1) During the year ended December 31, 2022, we recognized an incremental loss of $1.7 million due to post-closing adjustments related to hotels sold in 2021.
GAAP net income to FFO and Adjusted FFO (in thousands): Year Ended December 31, 2024 2023 2022 Net income $ 48,250 $ 86,635 $ 109,705 Real estate related depreciation and amortization 113,588 111,302 108,849 Impairment losses 34,169 941 2,843 Loss on sale of hotel properties (1) — — 1,659 FFO 196,007 198,878 223,056 Distributions to preferred stockholders (9,817) (9,817) (9,817) FFO available to common stock and unit holders 186,190 189,061 213,239 Non-cash lease expense and other amortization 6,092 6,156 6,226 Loss on early extinguishment of debt — — 9,766 Hotel pre-opening costs 1,006 1,246 — Hotel manager transition items — — 1,164 Severance costs (2) 20,362 — (532) Fair value adjustments to interest rate swaps — 2,033 (13,914) Adjusted FFO available to common stock and unit holders $ 213,650 $ 198,496 $ 215,949 _______________ (1) During the year ended December 31, 2022, we recognized an incremental loss of $1.7 million due to post-closing adjustments related to hotels sold in 2021.
We expect the expansion of corporate travel demand will enable the industry to improve profits in 2024 and we enter the year with several favorable factors, including: (1) ownership of a high-quality portfolio, with a strong group revenue pace for 2024, based on group bookings to date (2) internal growth from five recent and three additional in process hotel rebranding or repositionings, (3) internal growth from the continuation of our asset management initiatives and return on investment projects, (4) conservative debt capital structure with limited near-term debt maturities, and (5) liquidity of $623.5million as of December 31, 2023.
We expect the continued expansion of corporate travel demand will enable the industry to improve profits in 2025 and we enter the year with several favorable factors, including: (1) ownership of a high-quality portfolio, (2) expected internal growth from six recent and one additional in-process hotel rebranding or repositionings, (3) expected internal growth from the continuation of our asset management initiatives and return on investment projects, (4) conservative debt capital structure, and (5) liquidity of $584.3 million as of December 31, 2024.
As of December 31, 2023, we had $121.6 million of unrestricted corporate cash and $45.6 million of restricted cash, and no outstanding borrowings on our senior unsecured credit facility. Our net cash provided by operations was $237.6 million for the year ended December 31, 2023.
Sources and Uses of Cash As of December 31, 2024, we had $81.4 million of unrestricted corporate cash and $47.4 million of restricted cash, and no outstanding borrowings on our senior unsecured credit facility. Our net cash provided by operations was $224.4 million for the year ended December 31, 2024.
Overview DiamondRock Hospitality Company (the “Company” or “we”) is a lodging-focused real estate company that owns a portfolio of premium hotels and resorts. As of December 31, 2023, we owned 36 hotels with 9,746 rooms located in 25 different markets in the United States.
Overview DiamondRock Hospitality Company (the “Company” or “we”) is a lodging-focused real estate company that owns a portfolio of premium hotels and resorts. As of December 31, 2024, we owned 37 hotels with 10,004 rooms located in 26 different markets in the U.S.
The remaining increase of $17.7 million was primarily due to increases in both banquet revenues and outlet revenues. Other revenues, which primarily represent spa, parking, resort fees and attrition and cancellation fees, increased $15.7 million from the year ended December 31, 2022 to the year ended December 31, 2023, $11.1 million of which was due to non-comparable properties.
Other revenues, which primarily represent spa, parking, resort fees and attrition and cancellation fees, increased $7.9 million from the year ended December 31, 2023 to the year ended December 31, 2024, $1.5 million of which was due to non-comparable properties. The remaining increase of $6.4 million was primarily due to increases in resort fees and parking revenues. Hotel operating expenses.
GAAP net income to EBITDA, EBITDA re, Adjusted EBITDA and Hotel Adjusted EBITDA (in thousands): Year Ended December 31, 2023 2022 2021 Net income (loss) $ 86,635 $ 109,705 $ (195,405) Interest expense 65,072 38,283 37,043 Income tax expense 317 2,607 3,267 Real estate related depreciation and amortization 111,302 108,849 102,963 EBITDA 263,326 259,444 (52,132) Impairment losses 941 2,843 126,697 Loss on sale of hotel properties (1) — 1,659 — EBITDA re 264,267 263,946 74,565 Non-cash lease expense and other amortization 6,156 6,226 6,673 Professional fees and pre-opening costs related to Frenchman's Reef (2) — — 1,388 Uninsured costs related to natural disasters (3) — — 298 Loss on early extinguishment of debt — 9,766 — Hotel pre-opening costs 1,246 — — Hotel manager transition items — 1,164 651 Severance costs (4) — (532) (37) Adjusted EBITDA $ 271,669 $ 280,570 $ 83,538 Corporate expenses 32,048 31,790 32,552 Interest (income) and other (income) expense, net (2,561) (255) (947) Hotel Adjusted EBITDA $ 301,156 $ 312,105 $ 115,143 _______________ -57- Table of Contents (1) During the year ended December 31, 2022, we recognized an incremental loss of $1.7 million due to post-closing adjustments related to hotels sold in 2021.
GAAP net income to EBITDA, EBITDA re, Adjusted EBITDA and Hotel Adjusted EBITDA (in thousands): Year Ended December 31, 2024 2023 2022 Net income $ 48,250 $ 86,635 $ 109,705 Interest expense 65,516 65,072 38,283 Income tax expense 1,541 317 2,607 Real estate related depreciation and amortization 113,588 111,302 108,849 EBITDA 228,895 263,326 259,444 Impairment losses 34,169 941 2,843 Loss on sale of hotel properties (1) — — 1,659 EBITDA re 263,064 264,267 263,946 Non-cash lease expense and other amortization 5,970 6,156 6,226 Loss on early extinguishment of debt — — 9,766 Hotel pre-opening costs 1,006 1,246 — Hotel manager transition items — — 1,164 Severance costs (2) 20,362 — (532) Adjusted EBITDA $ 290,402 $ 271,669 $ 280,570 Corporate expenses 32,549 32,048 31,790 Interest (income) and other (income) expense, net (4,337) (2,561) (255) Hotel Adjusted EBITDA $ 318,614 $ 301,156 $ 312,105 _______________ -55- Table of Contents (1) During the year ended December 31, 2022, we recognized an incremental loss of $1.7 million due to post-closing adjustments related to hotels sold in 2021.
The properties detailed for the non-comparable periods highlighted in the table below are hereinafter referred to as “non-comparable properties” and all other properties are referred to as “comparable properties”: Property Location Acquisition Date Tranquility Bay Beachfront Resort Marathon, Florida January 6, 2022 Kimpton Shorebreak Fort Lauderdale Beach Resort Fort Lauderdale, Florida April 1, 2022 Lake Austin Spa Resort Austin, Texas November 21, 2022 Chico Hot Springs Resort & Day Spa Pray, Montana August 1, 2023 Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022 Revenue .
The properties detailed for the non-comparable periods highlighted in the table below are hereinafter referred to as “non-comparable properties” and all other properties are referred to as “comparable properties”: Property Location Acquisition Date Chico Hot Springs Resort & Day Spa Pray, Montana August 1, 2023 AC Hotel Minneapolis Downtown Minneapolis, Minnesota November 12, 2024 Comparison of the Year Ended December 31, 2024 to the Year Ended December 31, 2023 Revenue .
Longer term, we believe robust secular demand for experiential leisure travel, low growth in directly competitive supply, and targeted investments to renovate and reposition destination hotels can extend and intensify our growth.
Longer term, we believe robust secular demand for experiential leisure travel, low growth in directly competitive supply, and targeted investments to renovate and reposition destination hotels can extend and intensify our growth. We anticipate industry profitability will be challenged by elevated interest rates and cost pressures on labor, insurance and property taxes.
During the year ended December 31, 2023, we recorded impairment losses of $0.9 million related to the write-off of construction in progress that was determined not to be recoverable.
The impairment adjusts the hotel's carrying amount to its estimated fair value less costs to sell. During the year ended December 31, 2023, we recorded an impairment loss of $0.9 million related to the write-off of construction in progress that was determined not to be recoverable. Corporate expenses.
During the year ended December 31, 2023, we repurchased 318,454 shares of common stock at an average price of $7.60 per share for an aggregate purchase price of $2.4 million. Information about our share repurchase program is in Note 9 to the accompanying consolidated financial statements.
The new share repurchase program will expire on May 1, 2026. During the year ended December 31, 2024, we repurchased 3,114,876 shares of common stock at an average price of $8.33 per share for an aggregate purchase price of $26.0 million. Information about our share repurchase program is in Note 9 to the accompanying consolidated financial statements.
Additional information about the credit and term loan facilities, including a summary of significant covenants, can be found in Note 5 to the accompanying consolidated financial statements.
As of December 31, 2024, we had $400 million of borrowing capacity under our senior unsecured revolving credit facility. Additional information about the credit and term loan facilities, including a summary of significant covenants, can be found in Note 5 to the accompanying consolidated financial statements.
Information about our financing activities is available in Note 5 to the accompanying consolidated financial statements. ATM Program We maintain an “at-the-market” equity offering program (the “ATM Program”), pursuant to which we may issue and sell shares of our common stock from time to time, having an aggregate offering price of up to $200.0 million.
ATM Program In August 2024, our board of directors approved an “at-the-market” equity offering program (the “Current ATM Program”), pursuant to which we may issue and sell shares of our common stock from time to time, having an aggregate offering price of up to $200.0 million.
We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure. EBITDA and EBITDA re EBITDA represents net income (calculated in accordance with U.S. GAAP) excluding: (1) interest expense; (2) provision for income taxes, including income taxes applicable to sale of assets; and (3) depreciation and amortization.
We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure. -53- Table of Contents EBITDA and EBITDA re EBITDA represents net income (calculated in accordance with U.S.
Generally Accepted -46- Table of Contents Accounting Principles (“U.S. GAAP”), as well as other financial information that is not prepared in accordance with U.S. GAAP. In addition, we use other information that may not be financial in nature, including statistical information and comparative data.
GAAP”), as well as other financial information that is not prepared in accordance with U.S. -44- Table of Contents GAAP. In addition, we use other information that may not be financial in nature, including statistical information and comparative data. We use this information to measure the performance of individual hotels, groups of hotels and/or our business as a whole.
City Center Washington, D.C. 410 73.0 % 219.08 159.99 24.1 % The Dagny Boston (formerly Hilton Boston Downtown) Boston, Massachusetts 403 77.8 % 278.65 216.90 (4.8) % The Hythe Vail Vail, Colorado 344 56.4 % 436.67 246.16 7.3 % Courtyard New York Manhattan/Midtown East New York, New York 321 90.9 % 342.30 311.13 13.1 % Atlanta Marriott Alpharetta Atlanta, Georgia 318 65.7 % 155.55 102.21 21.4 % The Gwen Chicago, Illinois 311 74.5 % 297.18 221.33 1.7 % Hilton Garden Inn New York/Times Square Central New York, New York 282 91.4 % 275.67 251.93 (2.3) % Embassy Suites by Hilton Bethesda Bethesda, Maryland 272 71.0 % 163.92 116.45 55.2 % Hilton Burlington Lake Champlain Burlington, Vermont 258 75.7 % 248.79 188.22 3.9 % Henderson Beach Resort Destin, Florida 255 55.4 % 432.60 239.49 (18.2) % Kimpton Hotel Palomar Phoenix Phoenix, Arizona 242 76.0 % 222.03 168.84 16.1 % Bourbon Orleans Hotel New Orleans, Louisiana 220 75.6 % 241.00 182.23 14.7 % Hotel Clio Denver, Colorado 199 71.9 % 313.75 225.52 6.4 % Courtyard New York Manhattan/Fifth Avenue New York, New York 189 95.3 % 289.73 276.15 6.7 % Margaritaville Beach House Key West Key West, Florida 186 82.7 % 398.18 329.19 (8.3) % The Lodge at Sonoma Resort Sonoma, California 182 60.2 % 451.90 272.13 (6.0) % Courtyard Denver Downtown Denver, Colorado 177 75.2 % 216.78 163.04 7.4 % The Lindy Renaissance Charleston Hotel Charleston, South Carolina 167 88.7 % 347.26 307.88 0.2 % Kimpton Shorebreak Huntington Beach Resort Huntington Beach, California 157 81.9 % 322.69 264.35 (5.1) % Cavallo Point, The Lodge at the Golden Gate Sausalito, California 142 55.4 % 591.89 327.66 (8.5) % Chico Hot Springs Resort & Day Spa Pray, Montana 117 67.0 % 183.46 122.97 5.1 % Havana Cabana Key West Key West, Florida 106 83.2 % 300.60 250.01 (10.4) % Tranquility Bay Beachfront Resort Marathon, Florida 103 76.8 % 630.39 484.26 (11.4) % Hotel Emblem San Francisco San Francisco, California 96 65.8 % 234.34 154.14 (4.9) % Kimpton Shorebreak Fort Lauderdale Beach Resort Fort Lauderdale, Florida 96 67.7 % 211.05 142.94 (6.0) % L'Auberge de Sedona Sedona, Arizona 88 62.8 % 926.89 581.76 (18.2) % The Landing Lake Tahoe Resort & Spa South Lake Tahoe, California 82 51.4 % 448.48 230.43 (7.7) % Orchards Inn Sedona Sedona, Arizona 70 59.9 % 293.83 176.08 (12.8) % Lake Austin Spa Resort Austin, Texas 40 58.5 % 1,065.76 623.11 (17.1) % Henderson Park Inn Destin, Florida 37 68.9 % 595.38 410.13 (12.7) % TOTAL/WEIGHTED AVERAGE 9,746 72.1 % $ 282.11 $ 203.32 2.9 % ________________ (1) The percentage change from 2022 RevPAR reflects the comparable period in 2022 to our 2023 ownership period.
City Center (2) Washington, D.C. 410 69.5 % 244.68 170.10 6.3 % The Dagny Boston Boston, Massachusetts 403 85.5 % 277.32 236.99 9.3 % The Hythe Vail Vail, Colorado 344 59.8 % 425.03 254.21 3.3 % Courtyard New York Manhattan/Midtown East New York, New York 321 92.3 % 357.72 330.11 6.1 % Atlanta Marriott Alpharetta Atlanta, Georgia 318 64.4 % 157.97 101.66 (0.5) % The Gwen Chicago, Illinois 311 75.2 % 296.64 222.93 0.7 % Hilton Garden Inn New York/Times Square Central New York, New York 282 92.0 % 280.33 257.81 2.3 % Embassy Suites by Hilton Bethesda Bethesda, Maryland 272 69.7 % 175.06 122.07 4.8 % Hotel Champlain Burlington Burlington, Vermont 258 74.6 % 235.51 175.69 (6.7) % Henderson Beach Resort Destin, Florida 269 53.1 % 406.38 215.61 (10.0) % AC Hotel Minneapolis Downtown (3) Minneapolis, Minnesota 245 39.4 % 136.45 53.73 13.4 % Kimpton Hotel Palomar Phoenix Phoenix, Arizona 242 75.1 % 222.82 167.41 (0.8) % Bourbon Orleans Hotel New Orleans, Louisiana 220 68.5 % 249.85 171.10 (6.1) % Hotel Clio Denver, Colorado 199 77.9 % 304.46 237.26 5.2 % Courtyard New York Manhattan/Fifth Avenue New York, New York 189 91.5 % 306.10 280.11 1.4 % Margaritaville Beach House Key West Key West, Florida 186 82.3 % 396.94 326.63 (0.8) % The Lodge at Sonoma Resort Sonoma, California 182 67.3 % 405.07 272.43 0.1 % Courtyard Denver Downtown Denver, Colorado 177 77.2 % 202.95 156.69 (3.9) % The Lindy Renaissance Charleston Hotel Charleston, South Carolina 167 87.8 % 344.88 302.80 (1.7) % Kimpton Shorebreak Huntington Beach Resort Huntington Beach, California 157 82.1 % 312.59 256.56 (2.9) % Cavallo Point, The Lodge at the Golden Gate Sausalito, California 142 60.3 % 574.60 346.53 5.8 % Chico Hot Springs Resort & Day Spa Pray, Montana 117 70.4 % 205.35 144.62 15.2 % Havana Cabana Key West Key West, Florida 106 77.7 % 293.52 227.99 (8.8) % Tranquility Bay Beachfront Resort Marathon, Florida 103 73.7 % 601.79 443.56 (8.4) % Hotel Emblem San Francisco San Francisco, California 96 59.9 % 195.52 117.20 (24.0) % Kimpton Shorebreak Fort Lauderdale Beach Resort Fort Lauderdale, Florida 96 73.7 % 203.39 149.98 4.9 % L'Auberge de Sedona Sedona, Arizona 88 67.3 % 886.86 597.16 2.6 % The Landing Lake Tahoe Resort & Spa South Lake Tahoe, California 82 60.7 % 415.66 252.27 9.5 % Orchards Inn Sedona Sedona, Arizona 70 50.0 % 293.23 146.71 (16.7) % Lake Austin Spa Resort Austin, Texas 40 57.8 % 1,012.08 585.19 (6.1) % Henderson Park Inn Destin, Florida 37 65.6 % 575.56 377.33 (8.0) % TOTAL/WEIGHTED AVERAGE 10,004 72.8 % $ 284.63 $ 207.30 2.5 % ________________ (1) The percentage change from 2023 RevPAR reflects the comparable period in 2023 to our 2024 ownership period.
The following represent certain critical accounting policies that require us to exercise our business judgment or make significant estimates: Investment in Hotels Property and equipment are recorded at cost.
The following represent certain critical accounting policies that require us to exercise our business judgment or make significant estimates: Investment in Hotels Property and equipment are recorded at cost. Costs of improvements that extend the economic life or improve service potential, which generally includes significant improvements, renovations and replacements, are capitalized, while repairs and maintenance are expensed as incurred.
The operating expenses consisted of the following (in thousands): Year Ended December 31, Change 2023 2022 $ % Rooms $ 176,765 $ 163,062 $ 13,703 8.4 % Food and beverage 180,546 163,622 16,924 10.3 Other departmental and support expenses 261,536 233,691 27,845 11.9 Management fees 24,998 23,439 1,559 6.7 Franchise fees 35,738 32,683 3,055 9.3 Other property-level expenses 102,177 80,258 21,919 27.3 Total hotel operating expenses $ 781,760 $ 696,755 $ 85,005 12.2 % Our hotel operating expenses increased $85.0 million from $696.8 million for the year ended December 31, 2022 to $781.8 million for the year ended December 31, 2023, $21.6 million of which was due to the acquisition of non-comparable properties.
The operating expenses consisted of the following (in thousands): Year Ended December 31, Change 2024 2023 $ % Rooms $ 186,131 $ 176,765 $ 9,366 5.3 % Food and beverage 193,331 180,546 12,785 7.1 Other departmental and support expenses 268,563 261,536 7,027 2.7 Management fees 27,149 24,998 2,151 8.6 Franchise fees 39,724 35,738 3,986 11.2 Other property-level expenses 103,347 102,177 1,170 1.1 Total hotel operating expenses $ 818,245 $ 781,760 $ 36,485 4.7 % Our hotel operating expenses increased $36.5 million from $781.8 million for the year ended December 31, 2023 to $818.2 million for the year ended December 31, 2024, $8.3 million of which was due to the acquisition of non-comparable properties.
Our Hotels The following table sets forth certain operating information for the year ended December 31, 2023 for each of the hotels we owned during 2023. -47- Table of Contents Property Location Number of Rooms Occupancy (%) ADR ($) RevPAR($) % Change from 2022 RevPAR (1) Chicago Marriott Downtown Magnificent Mile Chicago, Illinois 1,200 59.5 % $ 246.73 $ 146.76 11.0 % Westin Boston Seaport District Boston, Massachusetts 793 81.9 % 246.93 202.17 11.6 % Salt Lake City Marriott Downtown at City Creek Salt Lake City, Utah 510 62.6 % 186.86 116.96 11.7 % Worthington Renaissance Fort Worth Hotel Fort Worth, Texas 504 73.3 % 197.52 144.86 11.5 % Westin San Diego Bayview San Diego, California 436 76.1 % 217.02 165.18 12.5 % Westin Fort Lauderdale Beach Resort Fort Lauderdale, Florida 433 74.2 % 264.71 196.48 (3.8) % Westin Washington D.C.
Our Hotels The following table sets forth certain operating information for the year ended December 31, 2024 for each of the hotels we owned during 2024. -45- Table of Contents Property Location Number of Rooms Occupancy (%) ADR ($) RevPAR($) % Change from 2023 RevPAR (1) Chicago Marriott Downtown Magnificent Mile Chicago, Illinois 1,200 63.4 % $ 257.60 $ 163.27 11.3 % Westin Boston Seaport District Boston, Massachusetts 793 83.6 % 265.23 221.75 9.7 % Salt Lake City Marriott Downtown at City Creek Salt Lake City, Utah 510 66.5 % 192.28 127.86 9.3 % Worthington Renaissance Fort Worth Hotel Fort Worth, Texas 504 70.7 % 206.33 145.86 0.7 % Westin San Diego Bayview San Diego, California 436 72.0 % 229.57 165.35 0.1 % Westin Fort Lauderdale Beach Resort Fort Lauderdale, Florida 432 78.1 % 254.95 199.04 1.3 % Westin Washington D.C.
Inflation may also affect our expenses and cost of capital improvements, including, without limitation, by increasing the costs of labor, employee-related benefits, food, commodities and other materials, taxes, property and casualty insurance and utilities. Inflation has increased recently to levels not seen in years. The United States Federal Reserve has raised interest rates in response to concerns about inflation.
Inflation may also affect our expenses and cost of capital improvements, including, without limitation, by increasing the costs of labor, employee-related benefits, food, commodities and other materials, taxes, property and casualty insurance and utilities. During 2024, inflation levels began to decrease, but remained elevated relative to the years preceding 2021.
We currently anticipate our significant sources of cash for the year ending December 31, 2024 will be the net cash flow from hotel operations and any potential hotel dispositions.
We currently anticipate our significant sources of cash for the year ending December 31, 2025 will be the net cash flow from hotel operations, proceeds from the sale of the Westin Washington D.C. City Center, and proceeds from debt financings or sales of debt securities.
Revenue consists of the following (in thousands): -49- Table of Contents Year Ended December 31, Change 2023 2022 $ % Rooms $ 717,447 $ 681,269 $ 36,178 5.3 % Food and beverage 259,757 238,234 21,523 9.0 Other 97,663 82,000 15,663 19.1 Total revenues $ 1,074,867 $ 1,001,503 $ 73,364 7.3 % Our total revenues increased $73.4 million from $1,001.5 million for the year ended December 31, 2022 to $1,074.9 million for the year ended December 31, 2023.
Revenue consists of the following (in thousands): Year Ended December 31, Change 2024 2023 $ % Rooms $ 742,626 $ 717,447 $ 25,179 3.5 % Food and beverage 281,682 259,757 21,925 8.4 Other 105,575 97,663 7,912 8.1 Total revenues $ 1,129,883 $ 1,074,867 $ 55,016 5.1 % Our total revenues increased $55.0 million from $1,074.9 million for the year ended December 31, 2023 to $1,129.9 million for the year ended December 31, 2024.
We have one mortgage loan maturing in August 2024, which we intend to repay using cash on hand. As of December 31, 2023, 32 of our 36 hotels are unencumbered by mortgage debt. We remain committed to our core strategy of prudent leverage.
As of December 31, 2024, 34 of our 37 hotels are unencumbered by mortgage debt. We remain committed to our core strategy of prudent leverage.
We expect to spend approximately $100 million in capital improvements at our hotels in 2024, which includes the completion of certain projects that commenced in 2023.
We expect to spend approximately $85 to $95 million i n capital improvements at our hotels in 2025, which includes the completion of certain projects that commenced in 2024. Significant projects in 2025 include the following: • Orchards Inn Sedona: We commenced the repositioning of Orchards Inn as the Cliffs at L'Auberge on November 1, 2024.
(4) Consists of severance costs incurred, and adjustments thereto, associated with the elimination of positions at our hotels, which are classified within other hotel expenses on the consolidated statement of operations. Critical Accounting Estimates and Policies Our consolidated financial statements include the accounts of DiamondRock Hospitality Company and all consolidated subsidiaries. The preparation of financial statements in conformity with U.S.
Critical Accounting Estimates and Policies Our consolidated financial statements include the accounts of DiamondRock Hospitality Company and all consolidated subsidiaries. The preparation of financial statements in conformity with U.S.
The acquisition cost is allocated to land, buildings, improvements, furniture, fixtures and equipment, as well as identifiable intangible and lease assets and liabilities.
Acquisitions of hotel properties are generally accounted for as acquisitions of a group of assets and recorded at relative fair value based upon total accumulated cost of the acquisition. The acquisition cost is allocated to land, buildings, improvements, furniture, fixtures and equipment, as well as identifiable intangible and lease assets and liabilities.
Rooms revenues increased by $36.2 million from the year ended December 31, 2022 to the year ended December 31, 2023, $12.7 million of which was due to the acquisition of the non-comparable properties.
Rooms revenues increased by $25.2 million from the year ended December 31, 2023 to the year ended December 31, 2024, $4.1 million of which was due to the acquisition of the non-comparable properties. The remaining increase of $21.1 million was the result of improved occupancy at our resort hotels and increased ADR at our urban hotels.
Year Ended December 31, 2023 2022 % Change Occupancy % 72.1 % 68.3 % 3.8 % ADR $ 282.11 $ 289.07 (2.4) % RevPAR $ 203.32 $ 197.50 2.9 % Food and beverage revenues increased $21.5 million from the year ended December 31, 2022 to the year ended December 31, 2023, of which $3.8 million was due to the acquisition of non-comparable properties.
The 2023 operating statistics reflect the period in 2023 comparable to our ownership period in 2024 for hotels acquired in 2024 and 2023. -47- Table of Contents Year Ended December 31, 2024 2023 % Change Occupancy % 72.8 % 72.0 % 0.8 % ADR $ 284.63 $ 281.12 1.2 % RevPAR $ 207.30 $ 202.29 2.5 % Food and beverage revenues increased $21.9 million from the year ended December 31, 2023 to the year ended December 31, 2024, of which $3.8 million was due to the acquisition of non-comparable properties.
The maturity date of the $300 million term loan may be extended for an additional year upon the payment of applicable fees and satisfaction of certain standard conditions. We have the right to increase the aggregate amount of the facilities to $1.4 billion upon the satisfaction of certain standard conditions.
In September 2024, we exercised our option to extend the maturity of our $300 million term loan from January 3, 2025 to January 3, 2026. We have the right to increase the aggregate amount of the facilities to $1.4 billion upon the satisfaction of certain standard conditions.
We use this information to measure the performance of individual hotels, groups of hotels and/or our business as a whole. We periodically compare historical information to our internal budgets as well as industry-wide information.
We periodically compare historical information to our internal budgets as well as industry-wide information.
We recorded an income tax expense of $0.3 million in 2023 and income tax expense of $2.6 million in 2022. The 2023 income tax expense was incurred on the $4.3 million pre-tax income of our TRSs. The 2023 income tax provision includes a change in our valuation allowance of $1.0 million.
The increase in income tax expense was the result of a $1.0 million change in our valuation allowance included in our 2023 income tax provision as well as higher state tax expense in 2024. The 2024 income tax provisio n includes a change in our valuation allowance of $0.2 million.
The following table outlines the timing and extent of our debt principal maturities and estimated interest payments for our mortgage debt and unsecured term loans as of December 31, 2023 (in thousands), assuming all extension options available in our debt agreements are exercised. -52- Table of Contents Principal Interest (1) Total Principal and Interest 2024 $ 82,381 $ 57,970 $ 140,351 2025 295,808 48,447 344,255 2026 300,000 36,619 336,619 2027 — 33,019 33,019 2028 500,000 251 500,251 $ 1,178,189 $ 176,306 $ 1,354,495 ______________ (1) The interest expense for our variable rate unsecured term loans is calculated based on the rate as of December 31, 2023 of 6.81%.
The following table outlines the timing and extent of our debt principal maturities and estimated interest payments for our mortgage debt and unsecured term loans as of December 31, 2024 (in thousands), assuming all extension options available in our debt agreements are exercised.
Our depreciation and -50- Table of Contents amortization expense increased $2.5 million from the year ended December 31, 2022 primarily due to the properties acquired during 2022 and 2023, as well as the renovations and rebrandings that were completed in 2022 and 2023. Impairment losses.
Our depreciation and amortization expense increased $2.3 million from $111.3 million for the year ended December 31, 2023 to $113.6 million for the year ended December 31, 2024, primarily due to the acquisition of the non-comparable properties. Impairment losses. During the year ended December 31, 2024, we recorded impairment losses of $32.6 million related to the Westin Washington D.C.
Our net cash used in investing activities was $120.8 million for the year ended December 31, 2023, which consisted of $86.3 million of capital expenditures, $32.7 million paid for the acquisition of the Chico Hot Springs Resort & Day Spa and adjacent ranch, and $1.8 million of cash paid for the acquisition of the land parcel underlying the parking structure at the Worthington Renaissance Fort Worth Hotel.
Our net cash used in investing activities was $112.1 million for the year ended December 31, 2024, which consisted of $81.6 million of capital expenditures and $30.5 million paid for the acquisition of the AC Hotel Minneapolis Downtown.
Significant projects in 2024 include the following: • Westin San Diego Bayview: In late 2023, we commenced a comprehensive renovation of the hotel's guestrooms, which is expected to be completed in the second quarter of 2024. • Hilton Burlington Lake Champlain: In 2023, we commenced a repositioning of the hotel to rebrand it as a Curio Collection by Hilton hotel.
Completed projects in 2024 included the following: • Hotel Champlain Burlington: We completed the rebranding and repositioning of the Hilton Burlington Lake Champlain to Hotel Champlain Burlington, a Curio Collection by Hilton in July 2024.
(4) Consists of severance costs incurred, and adjustments thereto, associated with the elimination of positions at our hotels, which are classified within other hotel expenses on the consolidated statement of operations. The following table is a reconciliation of our U.S.
(2) During the year ended December 31, 2024, we incurred severance costs related to the executive team changes that occurred in April 2024. During the year ended December 31, 2022, we incurred severance costs associated with the elimination of positions at our hotels. These costs are classified within other hotel expenses on the consolidated statement of operations.
We have not sold any shares under the ATM Program during the years ended December 31, 2023 and 2022. Share Repurchase Program Our board of directors has authorized a share repurchase program pursuant to which we are authorized to repurchase up to $200.0 million of our common stock through February 28, 2025.
Share Repurchase Program In May 2024, our board of directors authorized the repurchase of up to $200.0 million of our common stock under a new share repurchase program, which replaced our prior share repurchase program that was authorized in September 2022.
Our interest expense increased $26.8 million from $38.3 million for the year ended December 31, 2022 to $65.1 million for the year ended December 31, 2023, and was comprised of the following (in millions): Year Ended December 31, Change 2023 2022 $ % Mortgage debt interest $ 16,436 $ 23,276 $ (6,840) (29.4) % Term loan interest 43,294 21,153 $ 22,141 104.7 Credit facility interest and unused fees 1,256 5,279 $ (4,023) (76.2) Amortization of debt issuance costs and debt premium 2,053 2,489 $ (436) (17.5) Interest rate swap mark-to-market 2,033 (13,914) $ 15,947 (114.6) $ 65,072 $ 38,283 $ 26,789 70.0 % The increase in interest expense is primarily related to rising interest rates on our variable rate unsecured term loans and the change in the fair value of certain of our interest rate swaps not designated as cash flow hedges, which were designated as cash flow hedges as of April 1, 2023, partially offset by a decrease in mortgage debt interest related to the payoff of four mortgage loans in 2022.
Our interest expense increased $0.4 million from $65.1 million for the year ended December 31, 2023 to $65.5 million for the year ended December 31, 2024, and was comprised of the following (in thousands): Year Ended December 31, Change 2024 2023 $ % Mortgage debt interest $ 14,753 $ 16,436 $ (1,683) (10.2) % Term loan interest 47,232 43,294 3,938 9.1 Credit facility interest and unused fees 1,253 1,256 (3) (0.2) Amortization of debt issuance costs 1,967 2,053 (86) (4.2) Interest rate swap mark-to-market — 2,033 (2,033) (100.0) Finance lease expense (1) 311 — 311 100.0 $ 65,516 $ 65,072 $ 444 0.7 % (1) In October 2024, we extended the term on one of our ground leases, and, as a result, the lease classification changed from an operating lease to a finance lease.
However, the ultimate timing and impacts of these monetary policy changes and related impacts on the economy are unknown. Travel demand is highly sensitive to changes in macroeconomic factors and the threat of even a mild recession or slowdown creates a backdrop of uncertainty for the hospitality industry.
Travel demand is highly sensitive to changes in macroeconomic factors and even the threat of a modest slowdown creates a backdrop of uncertainty for the hospitality industry. Corporate and group travel demand is expected to remain steady, but persistent inflation, elevated operating costs, and -46- Table of Contents shifts in consumer preferences may create headwinds for the industry.
The Federal Reserve has indicated it will remain data dependent in determining whether to continue to raise or slowly ease interest rates during 2024.
While the Federal Reserve made several cuts to interest rates in the second half of 2024 in response to decreases in inflation levels, it continues to indicate that it will remain cautious in determining whether to hold its benchmark rate at current levels or continue to slowly ease interest rates throughout 2025.
Corporate expenses also include corporate operating costs, professional fees and directors’ fees. Our corporate expenses increased $0.2 million, from $31.8 million for the year ended December 31, 2022 to $32.0 million for the year ended December 31, 2023, primarily due to increases in employee-related costs.
Our corporate expenses increased $20.9 million, from $32.0 million for the year ended December 31, 2023 to $52.9 million for the year ended December 31, 2024, primarily due to $20.4 million of severance expense recognized due to the leadership changes announced in April 2024. -48- Table of Contents Business interruption insurance income.
We anticipate industry profitability will be challenged by elevated interest rates and pressures on labor costs, insurance and property taxes as well as a short booking window and emerging and shifting travel patterns. We continue to work closely with our hotel managers to maximize revenue and identify operating efficiencies.
We continue to work closely with our hotel managers to maximize revenue and identify operating efficiencies.
Removed
Overview for 2023 While our results for the year ended December 31, 2022 included a strong recovery from the pandemic, the Omicron variant of COVID-19 limited the recovery of our business during the beginning of that period.
Added
(2) On February 19, 2025, we sold the Westin Washington D.C. City Center hotel to an unaffiliated third party for $92 million. (3) On November 12, 2024, we acquired the 245-room AC Hotel Minneapolis Downtown located in Minneapolis, Minnesota for $30.5 million, including prorations and transaction costs. The acquisition was funded with corporate cash.
Removed
As such, the results for the year ended December 31, 2023 reflect improvement in comparison to the year ended December 31, 2022, when considering the pandemic.
Added
Outlook for 2025 U.S. economic growth is broadly projected to remain moderate in 2025, with persistent effects of monetary policy, elevated interest rates, and evolving consumer spending patterns influencing both businesses and households.
Removed
Certain customer segments, particularly business and group travel, continue to recover from the impacts of the pandemic, while other customer segments and markets related to destination leisure travel began stabilizing during the year ended December 31, 2023 after experiencing significant growth since 2021.
Added
While many economic forecasts suggest that the U.S. will continue to avoid a recession, growth is expected to be subdued, shaped by a cooling labor market, tighter credit conditions, and geopolitical uncertainties.
Removed
Our overall growth when comparing periods in 2023 to 2022 is more normalized than it was during the height of the pandemic and our subsequent recovery. Hotel Acquisitions. On August 1, 2023, we acquired the 117-room Chico Hot Springs Resort and an adjacent ranch located in Pray, Montana for $31.9 million, including prorations and transaction costs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−0 removed2 unchanged
Biggest changeAs of December 31, 2023, we held interest rate swaps related to $325 million of our variable-rate indebtedness, through which we receive one-month term SOFR and pay a fixed rate.
Biggest changeAs of December 31, 2024, we held interest rate swaps related to $225 million of our variable-rate indebtedness. In addition, effective January 2, 2025, we have an additional $100 million of interest rate swaps related to our variable-rate indebtedness. We receive one-month SOFR and pay a fixed rate for all of our interest rate swaps.
Our primary sensitivity in 2023 was to changes in one-month Secured Overnight Financing Rate (“SOFR”), as the interest rates on our variable-rate indebtedness were based on this benchmark rate. We use interest rate swaps in order to maintain what we believe to be an appropriate level of exposure to interest rate variability.
Our primary sensitivity in 2024 was to changes in one-month Secured Overnight Financing Rate (“SOFR”), as the interest rates on our variable-rate indebtedness were based on this benchmark rate. We use interest rate swaps in order to maintain what we believe to be an appropriate level of exposure to interest rate variability.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk -59- Table of Contents Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market sensitive instruments.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market sensitive instruments.
In pursuing our business strategies, the primary market risk to which we are currently exposed, and, to which we expect to be exposed in the future, is interest rate risk. The face amount of our outstanding debt as of December 31, 2023 was $1.2 billion, of which $0.8 billion had a variable interest rate.
In pursuing our business strategies, the primary -57- Table of Contents market risk to which we are currently exposed, and, to which we expect to be exposed in the future, is interest rate risk. The face amount of our outstanding debt as of December 31, 2024 was $1.1 billion, of which $0.8 billion had a variable interest rate.

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